Mellanox Doubles Tel Aviv Gain on Sales: Israel Overnight
Mellanox Technologies Ltd. (MLNX) surged 52 percent in New York, almost double the jump in Tel Aviv trading, after the Israeli adapter maker forecast second-quarter sales that surpassed analysts’ expectations.
Chief Executive Officer Eyal Waldman said in an interview that the company’s revenue will keep increasing.
“We can continue to grow,” Waldman said by phone from Sunnyvale, California yesterday. “Every time there’s a technology that can provide better efficiency and better utilization, people will migrate to use it.”
Shares of the Yokneam Elit, Israel-based company, whose customers range from International Business Machines Corp. to Oracle Corp. (ORCL), soared the most since Mellanox’s initial public offering in 2007 in both New York and Tel Aviv trading as the premium over the U.S.-traded stock widened to $10.60. Volumes traded surged to nineteen times the three-month average in New York.
Mellanox’s advance boosted gains in the Bloomberg Israel-US Equity Index (ISRA25BN) of the largest Israeli companies traded in New York, which added 4.2 percent to 92.90 yesterday, the most in eight months. Alvarion Ltd. (ALVR) gained the most in 2012 after the telecommunications equipment maker named a new chief executive officer.
Global Internet traffic jumped eightfold over the past five years, and will rise fourfold by the end of 2015, according to Cisco Systems Inc. (CSCO) Growing demand for faster data transfer and storage is helping boost earnings, said Waldman, 51.
Mellanox forecast second-quarter revenue of between $125 million and $130 million, exceeding the $83.4 million median estimate of 10 analysts surveyed by Bloomberg.
Sales increased to a record $88.7 million in the first quarter, while net income rose to $12.4 million after a loss of $1.6 million in the year-earlier period, Mellanox said in a Businesswire statement on April 8.
Wunderlich Securities Inc., Mizuho Securities USA Inc. and Lazard Capital Markets LLC recommended buying shares of Mellanox following the guidance.
With Mellanox’s “products now experiencing widespread multimarket adoption, we believe its dominant position will allow it to marry continuing revenue growth with significant operating leverage,” Brian Freed, an analyst at Wunderlich, wrote in an e-mailed report yesterday, raising his recommendation on the shares from hold.
The area of so-called big data, where specialists mine and make sense of the constantly expanding information available via the Internet, is growing, with more companies hiring for these positions, the Progressive Policy Institute in Washington said at the beginning of the month.
Mellanox jumped 27 percent to 207.80 shekels, or the equivalent of $55.26, in Tel Aviv yesterday. The company’s shares were the best performers on the benchmark TA-25 Index (TA-25) yesterday, which added 0.9 percent to 1,153.11.
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.
Oracle, the world’s largest maker of database software, reported a 62-cent adjusted profit per share that beat the 56- cent average analyst prediction on March 20.
The Redwood City, California-based company owns a 9.6 percent stake in Mellanox and its Exadata database appliance uses Mellanox’s technology. Exadata sales doubled in the quarter ended Feb. 29, Oracle said.
‘20 Times Improvement’
“Oracle is seeing 10 times to 20 times improvement” in the time it takes for data to be transferred, Waldman said. More companies are attracted to the “faster and better performance,” he said.
Tel Aviv-based Alvarion rose 9.5 percent to 68 cents, the biggest advance since Dec. 8, after its Israeli stock added 4.4 percent to 2.4 shekels, or the equivalent of 64 cents.
Hezi Lapid will replace Eran Gorev as Alvarion’s CEO on May 6, the company said in a Business Wire statement yesterday. Shares of Alvarion sank 30 percent on April 5 after the company cut its first-quarter revenue forecast.
“There has been a lot of pressure from investors to take the company in another direction,” Andrew Uerkwitz, a senior analyst at Oppenheimer & Co., said in a phone interview from New York. “With a new CEO, there is some confidence that it’s going to get back on track.”
Magic Software Enterprises Ltd. (MGIC) fell 0.8 percent to $6.08. The Israeli software technology company was cut hold from buy by Maxim Group LLC.
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