Bloomberg News

Intel’s Forecast Cut Pushes Tech Stocks Lower: Israel Overnight

December 14, 2011

Dec. 13 (Bloomberg) -- Israeli technology companies traded in New York fell yesterday after Intel Corp., the world’s largest chipmaker, cut its fourth-quarter sales guidance by $1 billion.

Check Point Software Technologies Ltd., the world’s second- largest network-security company, tumbled the most in two weeks in New York as Mellanox Technologies Ltd., the adapter maker that is part-owned by Oracle Corp., dropped the most in a month. Mellanox lost 2.7 percent at the 4:30 p.m. close in Tel Aviv as the TA-25 Index, the country’s benchmark stock index, rose 1.3 percent. The Bloomberg Israel-US 25 Index of the largest Israeli companies listed in New York was little changed yesterday, with Teva Pharmaceutical Industries Ltd. leading gains.

Israel has about 60 companies traded on the Nasdaq, the most of any country outside the U.S. after China, and is home to the largest number of startup companies per capita in the world. Technology developers dropped after Santa Clara, California- based Intel cut its sales forecast to about $13.7 billion from about $14.7 billion, citing a shortage of hard-disk drives for personal computers, resulting from flooding in Thailand.

“A slowdown in the semiconductor space means a potential slowdown in the economy,” said Andrew Uerkwitz, an Israeli- technology analyst at Oppenheimer & Co. in New York. “It’s fundamental for companies that have exposure to either the semiconductor names or semiconductor customers.”

Concern among investors that Europe’s debt crisis will curb demand for Israeli exports has pushed the TA-25 Index 19 percent lower in 2011. The Bloomberg Israel-US 25 Index rose less than 0.1 percent yesterday and is down 18 percent this year.

Trade Deficit

Israel’s trade deficit widened in November as imports rose nine times faster than exports, the Jerusalem-based Central Bureau of Statistics said yesterday on its website.

The gap, excluding polished diamonds, ships and aircraft, widened to a seasonally adjusted $1.64 billion from $1.45 billion the previous month. Exports rose 0.4 percent to $3.74 billion while imports climbed 3.8 percent to $5.37 billion.

The Bank of Israel is easing policy to help cushion the economy from the impact of the European debt crisis, even as inflation remains at the upper end of the government’s 1 percent to 3 percent target. The bank is likely to lower its 3.2 percent growth forecast for next year to “around” the 2.9 percent predicted by the Organization for Economic Cooperation and Development, Central Bank Governor Stanley Fischer said Dec. 7.

Israel “is now being affected by the worsening global outlook,” the OECD said in a report released yesterday. “The Bank of Israel has justifiably switched to a loosening stance in its policy rate.”

Teva Gains

The shekel was little changed at 3.7778 per dollar. The currency is headed for a 6.7 percent drop this year, the worst annual performance since 2002.

Teva, the world’s largest maker of generic drugs, gained 2.3 percent to 154.5 shekels, or the equivalent of $40.90. The U.S. shares climbed 1.1 percent yesterday to $40.66, the highest level in a month, after a multiple sclerosis patient taking a drug from Novartis AG died.

Novartis said the patient died on Nov. 23 after starting treatment with Gilenya, the Basel, Switzerland-based drugmaker’s pill for MS, a potential competitor for treatments from Teva.

The death is the first reported within 24 hours of the initial dose in more than 28,000 patients who have taken the drug, and a role for Gilenya in the death can’t be excluded or confirmed, spokesman Eric Althoff said yesterday in a statement.

“There was an expectation that eventually there would be some side effects from this drug,” said Les Funtleyder, a health-care strategist and portfolio manager at Miller Tabak & Co. in New York. The news “should be helpful for Teva.”

Plan B

Petach Tikva, Israel-based Teva is headed for a 22 percent drop this year in the U.S., its worst annual decline since 2006, as competition grows for its leading multiple sclerosis treatment Copaxone and after it introduced fewer generic drugs in the U.S.

An experimental multiple sclerosis pill being investigated as a successor to Copaxone may require another clinical trial before it can win approval to be sold in the U.S., Teva said on Nov. 2.

Kathleen Sebelius, secretary of U.S. Health and Human Services, said her decision against removing age controls on Teva’s emergency contraceptive, Plan B One-Step, wasn’t political, and the company can reapply.

Teva can submit an application with more testing for label comprehension and use among girls younger than 17, Sebelius said at a meeting on health-care jobs in New York yesterday.

Sebelius overruled a recommendation by Food and Drug Administration Commissioner Margaret Hamburg on Dec. 7 to end the age restrictions on Teva’s contraceptive. It was the first time HHS reversed an agency approval.

Mellanox

Intel dropped 4 percent to $24 yesterday, the second-worst performer in the Dow Jones Industrial Average, after saying supply shortages for hard drives are prompting computer producers to cut orders for other components.

Intel, whose microprocessors power more than 80 percent of the world’s PCs, is cutting the forecast after other chipmakers indicated the industry was recovering from floods in Thailand, which makes about a quarter of the world’s hard-disk drives.

Israel counts on exports for about 40 percent of gross domestic product, with 47 percent of the industrial shipping being high technology, according to figures compiled by the Jerusalem-based Central Bureau of Statistics.

Mellanox lost to 125.5 shekels, or the equivalent of $33.22 in Tel Aviv today. The U.S. shares fell 5 percent to $33.42.

Check Point

Check Point dropped 2 percent to $53.56. CEVA Inc., the developer of chips available in most iPhones and iPads, retreated 3.8 percent to $27.44.

Allot Communications Ltd., the Israeli maker of high-speed networking equipment, advanced 2 percent to 71.22 shekels, or $18.85, the highest since listing a year ago. The U.S. shares added 0.4 percent to $18.47 yesterday.

The price estimate for Allot shares was raised to $20 from $18 at New York-based Rodman Renshaw LLC.

“The global market opportunity in bandwidth optimization is on the cusp of breaking out,” said Ashok Kumar, an analyst at Rodman. “Allot is a key beneficiary in this market.”

--Editors: Brendan Walsh, Glenn J. Kalinoski

To contact the reporter on this story: Tal Barak Harif in New York at tbarak@bloomberg.net

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


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