Ticonderoga on Cogo (Nasdaq:COGO), Huawei

Fresh off their first day at the China Tech Investor Tour, Ticonderoga Securities came away with their take on Cogo (Nasdaq:COGO) and Huawei.

Ticonderoga said, "Cogo Still in Ramp Mode, We See More Upside Potential. After our Cogo (Buy-rated) meeting, we remain confident in the growth path at the company and believe our estimates for 2011 remain very conservative. With the momentum we see at Cogo, we would not be surprised if the company is able to reach $1 billion in revenue over the next few years. After today's meetings, we believe the company is well positioned to benefit from the continued investment in telecom infrastructure, combined with the ramp of China's mobile Internet, which remains in the early stages of development and ultimately will shift from 3G to 4G networks. Additionally, we remain intrigued by the ramp of new tablet customers, and the industrial business continues to have momentum into 2011.

"Huawei Sticks Its Head Into the Clouds; ZTE Handsets Rebound. Our meeting with Huawei highlighted the company's evolution from a telecom equipment vendor to a broader IT vendor with an aggressive cloud computing ramp. As such, we would not be surprised if the company is able to double its business in areas such as Ethernet switch and computing-related (e.g., storage, server) in 2011. Cisco (Nasdaq:CSCO)(Buy-rated) appears to be the target for Huawei in the near term and HP (NYSE:HPQ)(NR) over the longer term, while the company also plans to be a player in the cloud services market. On the supplier front, we sensed Huawei is positioned to ramp Altera (Nasdaq:ALTR)(NR) at a much faster pace than Xilinx (Nasdaq:XLNX)(NR) in 2011. During our ZTE meeting, we felt the company is satisfied with a strong ramp for the India 3G market and expects this to represent the fastest growth area in 2011. Also, the PTN business is expected to continue to enjoy strong growth in 2011, while we believe the handset business will enjoy a significant uptick in 4Q10 and terminals could top 100 million in 2011."

Cogo closed Monday at $7.73, up by $0.13, or 1.71 percent.