Perion Network Ltd. (PERI:US), the software maker whose New York shares trade at almost half of its historical valuation, fell to the lowest in four months in Tel Aviv as its lower-than-estimated sales forecast outweighed a search partnership with Yahoo! Inc. (YHOO:US)
Shares of the Tel Aviv-based company declined 2.3 percent to 37.32 shekels, the lowest since April 8, at 10:31 a.m. in Israel. The TA-25 Index (TA-25) rose 0.3 percent. The U.S.-traded shares sank 14 percent yesterday, the biggest retreat since March 2010.
Perion forecast maximum third-quarter sales of $22 million, below the mean projection (PERI:US) of four analysts surveyed by Bloomberg amid delays in implementing new partnerships. The projection overshadowed the announcement of a pact with Yahoo, which Perion is pursuing to diversify its revenue sources after Google Inc. (GOOG:US) halted automatic software downloads on Feb. 1, raising concern the number of Perion’s products installed would decline.
Google’s “policy change fell into place in February and everyone expected there would be some impact from that, but nobody knew how big it was going to be,” Jay Srivatsa, an analyst at Chardan Capital Markets LLC in New York who rates Perion a buy, said in a telephone interview yesterday. “They’re betting a lot on” Yahoo, he said. “We’ll have to wait to see how that plays out.”
In addition to Google and Yahoo, Perion has partnerships with Microsoft Corp.’s Bing, Oakland, California-based Ask.com and toolbar-developer Conduit. Google, which contributed all of Perion’s 2012 search revenue, accounted for 51 percent in the second quarter. Chief Executive Officer Josef Mandelbaum told Bloomberg News in June that no single provider will make up more than 50 percent of search revenue by the end of this year.
“Our second-quarter results were impacted by certain execution delays launching our new partnerships,” Mandelbaum said on a conference call with analysts yesterday. “These delays will also affect the third quarter.”
Perion fell to $10.33 in New York, sending its valuation (PERI:US) to 5.7 times estimated earnings, compared to an almost seven-year average of 11, according to data compiled by Bloomberg.
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