Mellanox Technologies Ltd. (MLNX:US) rallied for a second day in Tel Aviv after the U.S.-traded shares advanced on a report that the company will sell products to Microsoft Corp. (MSFT:US) and Google Inc. (GOOG:US)
The maker of equipment that speeds data transfers surged 12 percent, the most since Jan. 27, to 184 shekels, or the equivalent of $50.65, at the close in Tel Aviv. That brought the stock’s two-day jump to 17 percent. The company’s shares in the U.S. climbed 2.2 percent to $50.03 at 10:57 a.m. in New York. They soared 11 percent yesterday.
Mellanox is close to signing a deal to provide equipment for Internet projects by software maker Microsoft and Google, which will generate as much as $200 million in revenue, newspaper Globes reported yesterday, without saying where it obtained the information. Governor Terry Branstad announced June 21 that Microsoft will expand a data center in Iowa and there’s a “high probability” that Mellanox is part of the project, according to Jonathan Kreizman, an analyst at Clal Finance Batucha Brokerage Ltd.
“Both of these deals are not being factored into the Street’s estimates,” Kreizman, who has the equivalent of a buy rating (MLNX:US) for Mellanox, said in a telephone interview from Tel Aviv yesterday. “This could strongly impact the fourth quarter of 2013 and potentially also the first half of 2014.”
Sales at the Yokneam Elit, Israel-based company will decline 16 percent to $418.3 million this year, according to the average estimate of 15 analysts (MLNX:US) surveyed by Bloomberg. That would be the first drop in revenue since at least 2005. Second-quarter sales will be as much as $97.5 million, trailing analysts’ projections, the company said on April 24.
Brian Sparks, a spokesman for Mellanox in Sunnyvale, California, Krista Foxwell, a spokeswoman for Microsoft, and Kate Hurowitz, a spokeswoman for Google, declined to comment.
Israel’s benchmark TA-25 Index declined 0.2 percent today, bringing the drop for the month to 3.1 percent.
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