Top 10 Cloud Player Canceled Order for Silicom’s 100G Switch
19 March, 2018
Silicom has open POs related to the cancelled program. Silicom suspends Dividend Distribution to finance Ramp up related to a possible design win
Understanding Silicom may sometimes prove to be a real challenge: Take for example the recent announcement, is it a good one or a bad one? Silicom today announced that it expects to close several major, strategic new SD-WAN and NFV-related vCPE Design Wins from major telcos. “Given the significant size of each of these expected deals, their financial terms and the meaningful working capital that may be required to support them once they ramp up, the Company has decided today to suspend its dividend distributions to increase its available funds.”
Shaike Orbach, Silicom’s President and CEO, tried to clear the mystery: “Although we cannot yet formally announce any of these potential wins, we have already begun working on them with our customers, who assume – as do we – that the current situation will transform into a ‘full win’ within a short time. As such, we must make sure that we have all the financial resources to fulfill demanding supply commitments once these potential wins reach their full deployment run rate.”
Orbach concluded, “By building our financial reserves, we are readying ourselves to spring into action as soon as we get the final go-ahead. We are confident that this is the right strategy for building the Company to the next level, thereby serving the long-term interests of our shareholders.”
Earlier this month, Silicom revealed that a top-10 Cloud player, that awarded Silicom its largest-ever design win (reported in March 2017) has decided to abort the new cloud infrastructure architecture for which it had ordered the Silicom 100-Gigabit-Switch-Fabric-On-A-NIC product. “The customer indicated that the cancellation was unrelated to Silicom’s product, development or support. Its decision to abort the configuration was based on issues and challenges faced at a much higher level of the new Cloud architecture.
Silicom has open POs related to the cancelled program that are due for delivery within the first and second quarters of 2018. The Company is now evaluating the impact of the news on the results of these quarters, as well as on its future results. Generally, 2017 was a good year: For the full year 2017, Silicom’s revenues totalled a record $125.7 million, up 25% compared with $100.3 millionin 2016.