Bloomberg News

Doubts in Spain Send Syneron Tumbling: Israel Overnight

June 11, 2012

Israeli stocks (ISRA25BN:US) from Syneron (ELOS:US) Medical Ltd. to EZchip Semiconductor Ltd. (EZCH) slid in the U.S. on growing concern Spain’s bailout will fail to resolve the debt crisis in Europe, Israel’s biggest trading partner.

Shares of Syneron, the Israeli company that develops aesthetic medical devices, dropped the most since April 10 in New York yesterday, while EZchip (EZCH:US) fell 2.5 percent to trade at a discount of $1.22 versus the Tel Aviv shares. The Bloomberg Israel-US Equity Index (ISRA25BN) of the most traded Israeli companies in the U.S. retreated 0.8 percent to 81.78, paring earlier gains of as much as 1.8 percent.

Israeli equities fell as optimism faded that Spain’s 100 billion euro ($125 billion) bank bailout will contain a European sovereign debt crisis that began almost three years ago. Europe accounts for 36 percent of all Israeli goods sent abroad excluding diamonds. The nation gets about 40 percent of its gross domestic product from exports.

“The entire market is focused on the impact of an implosion in the euro zone and how far reaching it will be for the rest of the world,” said Chaim Fromowitz, the New York- based executive vice president and head of private banking at Bank Leumi USA, a unit of Israel’s largest lender by assets. “Europe is clearly an important block for Israel as a trading partner so the stocks are getting hurt.”

Israel’s TA-25 (TA-25) gauge, which fell 1.3 percent to 1,080.04 yesterday, has declined 0.5 percent in 2012, compared with a gain of 0.7 percent for the Israel-US Equity Index.

European Sales

Syneron, a Yokneam Elit, Israel-based maker of hair-removal lasers and anti-wrinkle devices, declined 3 percent to $10.73 in New York yesterday, falling from the highest level since March 19.

Western Europe is the company’s second-largest (ELOS:US) market, making up about 34.2 percent of sales, according to data compiled by Bloomberg. Another 34.4 percent of Syneron’s revenue is derived from North America.

EZchip, an Israeli maker of network processors that allow for faster transmission of voice and data, declined 2.5 percent to $35.88 in New York, retreating for a third day. The Tel Aviv shares rose 1.4 percent to 144 shekels, or the equivalent of $37.10.

Orbotech Investigation

Orbotech Ltd. (ORBK:US), based in Yavne, Israel, slipped 2.8 percent to $9.48 in New York yesterday, the lowest level in a week.

The Israeli maker of equipment used to test screens of smartphones and tablets reported that its South Korean unit and certain engineers are under criminal investigation relating to display panels. Fines of as much as $1.3 million may be imposed, a filing showed.

About 41 percent of the company’s sales came from China in 2011, while 16 percent are made in South Korea, according to data compiled by Bloomberg.

Mellanox Technologies Ltd. (MLNX:US) surged 2.4 percent to $63.10 in New York yesterday, the highest level since April 19. The shares trade at a discount of $2.47 versus its Tel Aviv shares.

Mellanox advanced 3.9 percent to 254.5 shekels in Israel, or $65.57, the highest since the company’s offering in July 2007.

Mellanox’s ConnectX-3 FDR InfiniBand adapter silicon, which allows for higher performance and application efficiency, was chosen by Intel Corp. (INTC:US) for use in its products, according to a statement yesterday.

Intel Deal

Intel, based in Santa Clara, California, threatened Mellanox’s domination of the InfiniBand market when it agreed in January to buy assets of QLogic Corp., a competitor to Mellanox.

“This deal is tangible confirmation Intel isn’t a near- term threat and that Mellanox will gain market share,” Brian Freed, Memphis-based vice president of equity research at Wunderlich Securities Inc., said by phone yesterday.

Israel, whose population of 7.8 million is similar in size to Switzerland’s, has about 60 companies trading on the Nasdaq Stock Market, the most of any nation outside the U.S. after China. The country is also home to more startup companies per capita than the U.S.

To contact the reporter on this story: Christine Harvey in New York at charvey32@bloomberg.net

To contact the editor responsible for this story: Tal Barak Harif at tbarak@bloomberg.net


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Companies Mentioned

  • ISRA25BN
    (Bloomberg Israel-US Equity Index)
    • $118.77 USD
    • -0.99
    • -0.83%
  • ELOS
    (Syneron Medical Ltd)
    • $9.88 USD
    • -0.05
    • -0.51%
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