What is driving MaxLinear, Inc. (NYSE: MXL) stock

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MaxLinear, Inc. (NYSE: MXL) stock surged 31.53% on April 6th, 2020 (Source: Google finance) and continued its bullish momentum even on April 7th, 2020, rising over11.5% (as of 10:31 am GMT-4; Source: Google finance).

The company & its wholly owned subsidiary have signed a definitive agreement with Intel Corporation under which MaxLinear would, which is subject to customary closing conditions, to acquire Intel’s Home Gateway Platform Division assets in an all-cash, asset transaction valued at $150 million. The acquisition will help the company to complement its existing portfolio, which will bring together a complete and scalable platform of connectivity and access solutions for its customers across target end-markets, as well as creating potential new revenue opportunities in adjacent target end-markets. MXL anticipates to initially to add approximately $60 million to $70 million in quarterly revenue, and the acquisition is projected to be accretive to MaxLinear’s non-GAAP earnings, in the first full quarter post close. The deal is projected to close in the third quarter of 2020, after fulfilling customary closing conditions, including regulatory approvals. The deal is not subject to financing contingencies.

Meanwhile, the company has also announced the preliminary total revenue range for the first quarter 2020. MaxLinear had earlier forecasted revenue to be in the range of $65 million to $70 million. The company now expects preliminary total revenue to be in the range of approximately $61.75 million to $62.25 million in Q1 2020. The preliminary unaudited revenue range is based on the impact of several industrywide dynamics related to the novel coronavirus (COVID-19), that includes the supply constraints early in the quarter, and certain customer push-out requests.

The company for fiscal 2020 expects Non-GAAP gross margin to be in the range of approximately 63.5% to 64.0% and Non-GAAP operating expenses is expected to be in the range of approximately $32.0 million to $32.5 million.

Moreover, for the fourth quarter of 2019, the company had reported declined of 12% sequentially, and down 20% year-on-year in the net revenue to $70.0 million. The company had generated Net cash flow provided by operating activities of $28.1 million, compared to $21.8 million in the prior quarter, and $24.2 million in the year-ago quarter. The company has posted Non-GAAP gross margin of 64.6% compared to 63.1% in the prior quarter, and 62.7% in the year-ago quarter. The company’s Non-GAAP operating expenses had fallen to$30.0 million, or 43% of revenue, compared to $30.8 million or 38% of revenue in the prior quarter, and $36.7 million or 42% of revenue in the year-ago quarter.

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