Mellanox Technologies Ltd. (MLNX) fell in New York to trade at the biggest discount to its Tel Aviv shares on record on concern the Israeli technology company will report slower growth after Advanced Micro Devices Inc. (AMD)’s sales dropped.
Mellanox, the maker of technology used to transfer and store data quickly, slumped 6 percent in New York, boosting the discount to the Tel Aviv stock to $5.58. The Bloomberg Israel-US Equity Index (ISRA25BN) of the most traded Israeli companies in New York tumbled 2 percent to 78.64, the lowest since Nov. 25. SodaStream International Ltd. slid the most in two months after Chief Executive Officer Daniel Birnbaum sold shares.
AMD, the second-biggest maker of processors for personal computers, said second-quarter sales fell as slower growth in China and a worsening economic climate in Europe reduced demand for the chipmaker’s products. Asia accounted for 31 percent of Mellanox’s revenue in 2011, while Europe represented 15 percent, according to data compiled by Bloomberg. The Standard & Poor’s 500 Index fell for a fourth day on concern technology companies’ corporate profits will drop.
“Investors are making a connection between Mellanox and Advanced Micro Devices, and concluding it means Mellanox’s sales will also be weak,” Brian Freed, vice president of equity research at Wunderlich Securities Inc., said by phone yesterday from Memphis. “In a market driven by fear, a connection like that will cause people to make a call to sell the stock.”
Israel’s TA-25 Index (TA-25) declined 0.5 percent to 1,073.62 at 10:24 a.m. in Tel Aviv, and has fallen 1.1 percent in 2012, compared with a decline of 3.2 percent for the Israel-US Equity Index.
The S&P 500 (SPX) slipped 0.8 percent to 1,341.47 yesterday, paring its gain to 6.7 percent in 2012, amid lower sales estimates for technology companies from Applied Materials Inc. to Cummins Inc. (CMI)
Mellanox tumbled to $69.03 in New York yesterday. The Tel Aviv shares retreated 6.7 percent to 276.7 shekels, or the equivalent of $69.73, today.
AMD’s second-quarter sales dropped to $1.41 billion in the second quarter, trailing the mean estimate of $1.43 billion forecast by 28 analysts surveyed by Bloomberg. The company, whose sales beat analysts’ predictions in the first quarter, projected higher sales in April, citing growing demand for personal computers.
The earnings report came after the European Central Bank last week cut its benchmark interest rate to a record low and China also reduced borrowing costs, adding to signs that global demand for products may weaken.
Increasing caution in Internet technology spending in North America and an uncertain economic situation in Europe is expected to hurt personal computer sales in the second quarter, according to a Bloomberg Industries report yesterday, which cited the IDC PC Forecast Tracker.
Slowing global server sales, which fell 2.4 percent in the first quarter, driven by a 14 percent decline in western Europe, are forecast to result in revenue declines for International Business Machines Corp. (IBM), Hewlett-Packard Co. (HPQ) and Dell Inc. (DELL), three of Mellanox’s largest customers, according to data compiled by Bloomberg.
Mellanox will probably say on July 18 that second-quarter revenue was $128 million, compared with $63.4 million in the year-earlier period, according to the mean estimate of 11 analysts surveyed by Bloomberg.
SodaStream (SODA), the Israeli maker of home soda machines, tumbled 7.9 percent to $38.21 in New York yesterday, the sharpest decline since May 3.
“The CEO selling of the shares is what people are watching,” Jim Chartier, an analyst at Moness Crespi Hardt & Co., said by phone from New York yesterday. “Sometimes investors think CEOs are timing the stock and sell ahead of bad news or buy ahead of good news. They’ve also decided to sell.”
EZchip Semiconductor Ltd. (EZCH) slid 4.5 percent to $35.25 in New York for a fourth day of losses and its longest losing streak since May 18. The shares closed at a discount of $1.69 versus the Tel Aviv stock. The stock today fell 4.8 percent to 139.4 shekels, or $35.14.
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.
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