Bloomberg News

Premium on Allot NY Shares Grows on Earnings: Israel Overnight

November 02, 2011

Nov. 2 (Bloomberg) -- Allot Communications Ltd., Israel’s biggest maker of high-speed networking equipment, rose to a three-month high in New York after posting earnings that beat forecasts, widening the premium to its Tel Aviv shares.

The shares gained 8.1 percent yesterday to $14.45 after earnings more than doubled in the third quarter, increasing the gap over the Tel Aviv shares to 78 cents, the biggest premium among shares in the Bloomberg Israel-US 25 Index. The measure of the largest Israeli companies traded in New York fell 3.7 percent, led by Internet Gold-Golden Lines Ltd. and Tower Semiconductor Ltd., extending the drop this week to 6.7 percent.

Allot, based in Hod Hasharon, Israel, is up 94 percent in the past 12 months, compared with a 16 percent drop in the Bloomberg Israel-US 25 Index. The company will benefit from rising demand for its systems that manage traffic on data networks as consumers view more videos on their mobile devices, said Jay Srivatsa, an analyst at Chardan Capital Markets LLC.

“Even though macro conditions are weak, people are not dropping off in terms of usage of cell phones or tablets,” he said. “All that adds to the increase in bandwidth which means you need network optimization.”

‘Following Europe’

Israeli companies trading in the U.S. plunged yesterday on concern that Europe’s plan to bail out Greece will unravel. The MSCI All-Country World Index fell 3.4 percent, and the Standard & Poor’s 500 Index lost the most in a month, dropping 2.8 percent. Israel’s benchmark TA-25 Index fell 2.8 percent, the biggest slide since Oct. 4.

“The whole world is following Europe in sympathy to what is going on in Greece,” said Gadi Beer, who manages the Amidex35 Israel Mutual Fund. “Israeli companies don’t serve only Israelis. These are basically international companies.”

The shekel fell the most against the dollar in three months, weakening 1.1 percent to 3.6625. It was the second-best performer against the dollar among 10 emerging markets in Europe, the Middle East and Africa tracked by Bloomberg.

Allot’s sales increased 37 percent to $20.1 million in the third quarter as five service providers made orders from the company for the first time, the company said in a statement.

Profit more than doubled to $2.1 million, or 8 cents a share. Earnings excluding certain items were 13 cents a share, exceeding the average estimate of 10 cents among eight analysts surveyed by Bloomberg. Adjusted earnings were 6 cents a share a year earlier.

“We’re not seeing any slowdown in European markets and we see a number of opportunities in the U.S. and Asia-Pacific for 2012,” Chief Executive Officer Rami Hadar said on a conference call with analysts.

Allot announced plans to sell $9.5 million of equipment to an Asian fixed-line operator on Oct. 25. Revenue from the order will likely be recognized over several quarters, Nachum Falek, Allot’s chief financial officer, said on the conference call.

Given, EZChip

Given Imaging Ltd., the Israeli maker of a pill-sized camera for digestive diagnosis, said after U.S. trading closed that sales rose 16 percent to $44.7 million in the third quarter and earnings excluding certain items increased to 17 cents a share from 11 cents in the period a year earlier.

Profit for the year will be “toward the lower end” of the previously announced range of 35 cents to 40 cents a share while revenue will be $173 million to $177 million, above the previously announced range, the company said in a statement.

Shares of the Yokneam, Israel-based company dropped 3.7 percent in New York to $15.14, 3 cents more than the shares in Tel Aviv.

EZChip Semiconductor Ltd., the Israeli maker of network processors, fell 4.6 percent to $34.74 in New York trading yesterday. The Tel Aviv shares dropped 0.1 percent to 130.50 shekels, or the equivalent of $35.60. The 86-cent difference was the largest among the biggest Israeli companies traded in New York. EZChip is scheduled to report results today.

Internet Gold-Golden Lines Ltd., the Israeli Internet service provider, fell 10 percent in U.S. trading to $14.59, the biggest decline among companies in the Israel-US 25 Index.

--Editors: Brendan Walsh, Glenn J. Kalinoski

To contact the reporter on this story: Zachary Tracer in New York at ztracer1@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net


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