Bloomberg News

Allot Caps Longest Gain Since 2010: Israel Overnight

July 01, 2012

Allot Communications Ltd. (ALLT:US), the Israeli company whose technology is used to manage traffic on networks, posted the longest winning streak since 2010 on prospects soaring data usage will boost demand for its products.

Shares of the Hod Hasharon, Israel-based company rallied for a sixth week, the longest string of advances since September 2010. Mellanox Technologies Ltd. (MLNX:US), the maker of technology used to transfer and store data quickly, added 2.2 percent last week, extending a record 69 percent for the three months ended June 29. The Bloomberg Israel-US Equity Index (ISRA25BN) of the most traded Israeli companies in the U.S. declined 8.7 percent to 82.03 last quarter, led by Internet Gold-Golden Lines Ltd. (IGLD:US)

Data usage on mobile phones, tablets and computers more than doubled globally last year as consumers watched more video and downloaded more files, boosting global traffic, according to data compiled by Cisco (CSCO:US) Systems Inc. Allot will probably post a 32 percent sales gain in the second quarter after revenue (ALLT:US) rose to a record (ALLT:US) $24 million in the first three months of the year, according to the mean estimate of 11 analysts surveyed by Bloomberg.

“Allot is in a sweet spot because they provide a gateway that helps operators deliver content and manage traffic,” Matthew Robison, an analyst at Wunderlich Securities Inc., said by phone from San Francisco on June 29. “The demand has been relatively strong even in a difficult economy. That’s why investors like it.”

Israel’s TA-25 Index (TA-25) climbed 2.3 percent at 1,082.29 at the close in Tel Aviv, trimming this year’s decline to 0.3 percent. The Israel-US Equity Index gained 0.1 percent in New York last week, paring its three-month loss.

‘No. 1 Problem’

Allot rose 4 percent to $27.86 in New York last week, sending valuations to 68 times reported earnings, more than four times the average multiple of 16 for companies traded on the Nasdaq Composite Index. (CCMP) The stock traded at a premium of $1.26 versus the Tel Aviv shares, the widest gap since May 29.

The company’s shares rallied 6 percent to 110.2 shekels, or $28.18, in Tel Aviv today, after advancing 24 percent for the three months ended June 28.

By 2016, the number of mobile Internet-connected devices is expected to surpass 10 billion with mobile data traffic reaching 10.8 exabytes per month, according to a February report by Cisco, a networking equipment maker.

“The No. 1 problem for mobile carriers right now is traffic because traffic on networks creates problems in quality of service,” Sanjit Singh, a New York-based analyst at Wedbush Securities Inc., said by phone on June 29. “Allot plays right into that space and should continue seeing waves of new activity that allow it to grow.”

‘Increased Momentum’

Allot will probably say revenue grew to $25 million in the second quarter, up from $19 million in the year-earlier period, according to the mean estimate (ALLT:US) of 11 analysts surveyed by Bloomberg.

The company’s first-quarter revenue surprised (ALLT:US) 34 percent of investors, the most since August 2010, data compiled by Bloomberg show.

Sales in Europe, the Middle East and Africa accounted for 73 percent of revenue in the first three months of the year, and 14 percent from the Americas, Nachum Falek, chief financial officer of Allot, said in a May 1 earnings call.

Allot is seeing “increased momentum in the Americas,” with carrier deals in North America and Latin America, Falek said during the call.

Mellanox Surges

Mellanox gained to $70.82 in New York in the quarter ending June 29. The Tel Aviv stock rose 2.5 percent to 275.7 shekels, the equivalent of $70.51, today. The Yokneam Elit, Israel-based company advanced in the U.S. during the three-month period after posting record first-quarter revenue (MLNX:US) of $88.7 million. The results surprised (MLNX:US) 51 percent of analysts, according to data compiled by Bloomberg.

Internet Gold, the company which owns a stake in Bezeq Israeli Telecommunication Corp. via its B Communications Ltd. (BCOM:US) unit, tumbled 59 percent to $2.84 in New York during the second quarter, the biggest three-month (IGLD:US) slide since December 2008.

The shares tumbled 58 percent to 10.68 shekels, or $2.73, in Tel Aviv in the three months ended June 28, its sixth consecutive quarterly loss. The stock rose 4.9 percent today.

Cellcom Israel Ltd. (CEL:US) and Partner Communications Co., Israel’s largest mobile-service providers, tumbled at least 47 percent as competition in the telecommunications industry intensified after the government forced providers to cut fees and encouraged new players to enter the market.

Israel, whose population of 7.8 million is similar in size to Switzerland’s, has about 60 companies traded on the Nasdaq Stock Market, the most of any country outside the U.S. after China. The nation 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

  • ALLT
    (Allot Communications Ltd)
    • $13.05 USD
    • -0.04
    • -0.31%
  • MLNX
    (Mellanox Technologies Ltd)
    • $41.89 USD
    • 4.32
    • 10.31%
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