AudioCodes Rides Microsoft Wave to Beat Nasdaq: Israel Overnight
Stock Chart for AudioCodes Ltd (AUDC)
AudioCodes Ltd. (AUDC), the Israeli company whose Internet calling technology is used by Microsoft Corp. (MSFT), is beating the biggest telecommunications companies on the Nasdaq market on prospects demand for its products will boost sales.
Shares of AudioCodes advanced 11 percent in February, extending its rally in the past six months to 186 percent and making the Lod, Israel-based company the best performer on the Nasdaq Telecommunications Index. The Bloomberg Israel-US Equity Index (ISRA25BN) of the largest U.S.-traded Israeli equities in New York dropped for a third week, led by Allot Communications Ltd. and Mellanox Technologies Ltd. (MLNX)
AudioCodes, which supplies Internet voice call products to Microsoft, is benefiting from plans by the world’s largest software maker to catch up with Cisco Systems Inc. in the Internet telephony and communications market, which Forrester Research Inc. (FORR) predicts will reach $14.5 billion in 2015. AudioCodes will probably report in 2013 the fastest revenue growth in three years, according to Oppenheimer & Co.
“The Microsoft people are crazy excited about it, and there is a real opportunity here for AudioCodes to make a name for themselves,” Andrew Uerkwitz, an analyst at Oppenheimer, said by phone from New York on Feb. 28. “This company really had an identity crisis, and once AudioCodes got its strategy figured out, investors came back to it.”
Shares of AudioCodes gained 0.1 percent to 15.30 shekels, or the equivalent of $4.11, at the close in Tel Aviv today. The benchmark TA-25 Index fell 0.4 percent to 1,216.09.
AudioCodes plunged to a three-year low of $1.37 in August, as sales slumped for six consecutive quarters. The company’s focus on Microsoft’s Lync communications system has lured back investors that had abandoned the stock as its price tumbled 45 percent during 2011 and 2012, Uerkwitz said.
Revenue from Microsoft’s Lync program, which offers corporate phone, video and instant messaging services, grew 35 percent in the second quarter, according to a Jan. 24 earnings call. The Redmond, Washington-based company has about 5 million Lync users, with revenue from the segment nearing $1 billion.
Sales of AudioCodes’ Lync products, which range from Internet handsets to call recording software, may grow as much as 40 percent in 2013, Uerkwitz said.
The Bloomberg Israel-US gauge retreated 0.3 percent to 87.26 last week as the TA-25 (TA-25) index increased 0.3 percent to 1,221.47.
Allot, the Hod Hasharon, Israel-based maker of products that track wireless traffic, declined 9.9 percent to $13.09 in the week, making it the worst performer on the Bloomberg Israel- US gauge. The shares in Tel Aviv dropped 8.4 percent to 48.75 shekels, or $13.10, today.
Procera Networks Inc. (PKT), a U.S. competitor that also helps cable companies and mobile operators report on network traffic, plunged 32 percent last week as its fourth-quarter earnings and revenue missed analysts’ estimates. Slumping growth at Fremont, California-based Procera may signal a broader slowdown in the industry, Wedbush Securities Inc. said.
“The customers have stopped spending temporarily,” Sanjit Singh, a New York-based analyst at Wedbush who rates Allot (ALLT) shares neutral, said by phone on March 1. “It’s not that the projects are going away, we just don’t know when they’re going to land.”
Mellanox dropped 3.1 percent to $51.19 in its fourth consecutive week of declines, while shares traded in Tel Aviv slipped 0.4 percent to 191.5 shekels, or $51.39, in the week ended Feb. 28. The stock was the worst-performing company on the TA-25 Index in the last six months with a 59 percent plunge through Friday. Mellanox shares gained 0.1 percent to 191.60 shekels, or $51.47, in Tel Aviv today.
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