Disclosures

Exar Corp

I, Dave Kang , certify that this report reflects my personal beliefs about this company and that no portion of my compensation was, is or will be directly or indirectly related to the specific recommendations or views discussed in this report.

Disclosure

• B. Riley & Co., LLC does and seeks to do business with companies covered in its research reports.
• A portion of this analyst’s compensation is based on the sales, trading and investment banking activities of B. Riley & Co., LLC.
• B. Riley & Co., LLC makes a market in the securities of the company covered in this report.

Resumed Coverage on 01/17/2008 with "Buy" Rating and Price Target of $10.00. Dropped coverage on 12/22/2008. Resumed coverage on 06/10/2010 with "Buy" Rating and Price Target of $9.00.

Explanation of B. Riley & Co. LLC's Rating System

• Buy: We generally expect "Buy" rated stocks to materially outperform both the S&P 500 and Russell 2000 as well as other stocks in their sector. Further, we believe that the potential reward relative to the potential risk is particularly attractive.
• Neutral: We generally believe "Neutral" rated stocks will perform roughly in line with the S&P 500 and Russell 2000 over the intermediate and long term.
• Sell: We generally expect "Sell" rated stocks to materially underperform both the S&P 500 and Russell 2000 as well as other stocks in their sector. Further, we believe that the potential reward relative to the potential risk is particularly unattractive.

Risks and Considerations

• Competition - The industry is highly competitive and many of the Company's competitors have greater resources.
• Economy - Macro-economic issues such as increasing oil and gas prices and a possible drop in consumer spending could have a negative impact on the Company's business.
• Financial Results - Any slow down or other changes in the capital spending pattern of the industry may negatively affect the Company's sales.
• Financial Results - The Company's business is affected by the general IT spending environment especially as customers delay purchases of IT equipment.
• Pricing Pressure - The Company's business could be affected by pricing pressure within the market.
• Sales Cycle - The Company's sales cycle could lengthen beyond what is normal.
• Further Potential Risks - See the Company's SEC filings, particularly its 10-K filing, for a discussion of further potential risks.

Additional Risks and Considerations

 

 

 

 

 

 

 

 

 

• Acquisition/Integration - The company actively evaluates potential acquisitions as part of its growth strategy. Acquisitions pursued by the company could be dilutive to financial results and result in a difficult, dilutive or expensive integration.
• Carrier spending trends - A significant portion of the company's revenue is tied to carrier capital spending trends. Fluctuations in wireless, long-haul and access capital spending could have a material negative impact on the company's results.
• Competition - The industry is highly competitive and many of the company's competitors have greater resources.
• Fabless Model - The company depends on third parties to manufacture its products, and is vulnerable to capacity constraints.
• Financial Results - The company may incur significant expenses before it generates revenues related to products as a result of its lengthy sales cycle.
• General Industry - The company could miss our estimates and/or their financial guidance.
• Intellectual Property -  The company's ability to compete may be harmed if it is unsuccessful in protecting its intellectual property.
• Litigation - The company may be subject to claims of infringement, and may be required to defend and/or indemnify customers against claims made by third-parties, which could result in significant legal expenses.
• Loss of Key Distributors - The company  derives a substantial portion of its revenues from distributors, and would be adversely impacted should they elect not to sell its products, cancel, reduce, or defer purchases of products.
• See the Company's SEC filings, particularly its 10-K filing, for a discussion of further potential risks.