Ikanos Communications, Inc. (NASDAQ:IKAN)

CAPS Rating: 4 out of 5

The Company is a global provider of high-performance silicon and software for interactive broadband.

Recs

9
Player Avatar Option1307 (29.73) Submitted: 5/12/2010 9:55:10 PM : Outperform Start Price: $2.76 IKAN Score: -153.19

Ikanos is a company that got smashed during the 2008/09 economic downturn; however, they positioned themselves nicely to weather the storm and actually came out of the mess in arguably better shape. IKAN was able to stay afloat because of their large cash position ($0.60/share) that they have always been adamant about keeping, not too mention the zero ($0.00) debt they have. Recently they picked up Conexant broadband on the cheap (~55M cash, yes I said cash!), and just finished their 2nd quarter post acquisition. So far this has been a nice boost and has increased revenue a little of 100%!

As I mentioned things have been turning around for IKAN, not only has the acquisition been a tremendous boost to revenue, it has also helped their EPS, which in the end is most important. IKAN has returned to profitable in the two most recent quarters after picking up Conexant and analysts are projecting them to earn $0.22 in 2010 and 0.35 in 2011 putting this at a forward P/E of 11.6 and 7.3 respectively, cheap! Keep in mind, these estimates essentially have not been updated much since the recent acquisition. Thus, I expect IKAN to significantly beat these estimates going forward.

To top it all off, IKAN has been growing revenue at a 5 year pace of ~18% yr./yr., that is a solid number! Just to top it off, throw in a PEG of ).60, nice!

This is surely a buy for the next several years.

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Member Avatar YoungShark (< 20) Submitted: 5/19/2010 8:23:06 PM
Recs: 0

Could not have worded it better myself so I won't try. Excellent points. Only concern is the market uncertainty/downturn but these prices are very cheap now for a long position to which I'm slowly adding to. Even the Technical Analysis shows strength even with the PPS dropping confirming my bullish thesis behind the fundamentals. I am reluctant to hold for years until later this year unfolds with the economy/market but if we at least have modest market/economic growth for years rather than another strong downturn, IKAN should shine.

Good luck out there.

Member Avatar ryanhodge (< 20) Submitted: 8/5/2010 10:58:21 AM
Recs: 0

Now Is the time to buy Ikan its trading at 1.18. Thats 75% of book value. Anyone can see that today is a panic sell. Buy now for a 25% gain in the next 3-6 months. The new CEO has background in turnaround and announced plant closings and staff cuts. The company is spending way too much on R&D. Some good cuts cant turn this company around and get it back to above book value in the short term.

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