Volterra Vaults Higher

Volterra Semiconductor Corporat VLTR the tiny $600 million semiconductor company you probably have never heard of is making shareholders very happy this afternoon after reported strong earnings. At last check, shares were up ~15% after the Fremont, CA-based company reported earnings of 28 cents per share on $41.7 million. Wall Street analysts had been expecting earnings of 23 cents per share on $38.6 million in revenues. The company said it was able to generate better than expected earnings because of growth in the notebook market, something not many semiconductor companies are saying these days. "Volterra achieved record revenue as our proprietary integrated power technology gained significant traction in the notebook market," said Volterra President and CEO Jeff Staszak. "Our server business also resumed sequential growth ahead of our next major product cycle, which is on track to begin ramping later this year." Volterra, which trades at less than 16 times forward earnings, competes with much larger companies such as Intersil Corp. ISIL, Linear Technology Corp LLTC and Texas Instruments Inc TXN for their markets. At less than $700 million in market cap, Volterra is a much smaller, and therefore, more nimble competitor to the big boys. Judging by today's reaction in the share price, it looks as if Volterra is about to become a bigger player and bigger threat to these companies. ACTION ITEMS:

Bullish:
Traders who believe that Volterra is going to keep gaining market share might want to consider the following trades:

• Go long Volterra and short the competitors in a pairs trade. If Volterra continues to grab market share, this trade should pay off two for one, as Volterra should be rewarded and the larger competitors presumably would be punished.

Bearish:
Traders who believe that Volterra's strong quarter was just a one-off event may consider alternate positions:

• Short Volterra. After today's big pop, shares are likely to pull back as traders lock in profits and move on to the next idea.

Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.