Mellanox Slumps as Oracle Says Hardware Sales to Decline

Mellanox Technologies Ltd. (MLNX) slid a sixth day in Tel Aviv and fell in New York after Oracle Corp. said sales of hardware that use the Israeli company’s products will decline.

Mellanox, the Yokneam Elit, Israel-based maker of technology used to transfer and store data, sank 3.4 percent in Tel Aviv to a two-week low of 197 shekels, and lost 0.7 percent to $54.84 by 12:03 p.m. in New York.

Oracle, the second-largest maker of business applications, reported fiscal third-quarter sales and net income that were below analysts’ estimates as customers moving to Internet-based programs bought less hardware. Product revenue in the segment will fall 13 percent to 23 percent in the current quarter, Oracle (ORCL) said yesterday. The Redwood City, California-based company accounted for 5.6 percent of Mellanox revenue in 2012, according to Piper Jaffray Cos.

“Oracle’s results last night called out weakness in hardware,” Andrew Nowinski, an analyst at Piper Jaffray in Minneapolis who rates Mellanox the equivalent of buy, said by phone. “Unfortunately, Mellanox products went into every piece of Oracle hardware.”

Mellanox forecast Jan. 23 first-quarter sales that trailed analysts’ estimates by as much as 48 percent amid a build-up in inventory by one of its customers. Sales for the three months ending this month will reach $78 million to $83 million, the company said. Earlier in January, Mellanox cut its fourth- quarter revenue forecast on weaker demand and a product glitch.

To contact the reporter on this story: Leslie Picker in New York at lpicker2@bloomberg.net

To contact the editor responsible for this story: Emma O’Brien at eobrien6@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.