Israeli stocks traded in New York fell, sending the benchmark index on track to its first monthly retreat since May, as the global slowdown propelled Nice Systems Ltd. and Ceragon Networks Ltd. to cut their outlooks.
The Bloomberg Israel-US Equity Index of the most traded Israeli companies in the U.S. slumped 0.8 percent to 83.35 yesterday, extending its decline this month to 1.6 percent. Nice Systems, a maker of analytical telecommunications software, is posting the biggest monthly decline in two years after cutting its profit and revenue forecasts. Ceragon, a maker of wireless networks, slumped 16 percent in August, the most in nine months.
Israeli companies are getting hit by a faltering economic recovery in the U.S. and the sovereign debt crisis in Europe. About 40 percent of the nation’s gross domestic product comes from exports, with Europe and the U.S. accounting for more than half of the trade. Nice sent more than 60 percent of its products to the U.S., while Ceragon received about 25 percent of its revenue from customers in Europe and the U.S.
“A lot of these technology companies had lowered their outlook and that has obviously impacted investor sentiment,” Daniel Meron, an analyst at RBC Capital Markets, said by phone yesterday from Tel Aviv. “It has more to do with the economic environment. Although some of these companies have their own dynamics, it all starts and ends with the economy.”
Israel’s TA-25 Index, which was little changed at 1,120.58 yesterday, climbed 1.3 percent in August, a second month of gains. The measure has gained 3.2 percent this year, outperforming the Bloomberg Israel-US Index’s 2.6 percent gain.
Reduced Sales Forecast
Europe’s economy will probably contract 0.2 percent in 2012, following an expansion of 1.5 percent in 2011 and 2.2 percent in 2010, according to data compiled by Bloomberg.
More Americans than forecast filed applications for unemployment benefits last week, a sign that progress in the labor market is faltering amid a slowing economy, according to a Labor Department report yesterday in Washington.
Nice Systems, based in Ra’Anana, Israel, reduced its 2012 sales forecast on Aug. 1 to a range of $890 million to $910 million from a previous estimate of as much as $950 million.
The macroeconomic environment is resulting in longer sales cycles and slower-than-expected growth, Nice’s Chief Executive Officer Zeevi Bregman said on a call with investors that day. Deals are taking longer to close because the “spending environment is deteriorating,” Bregman said.
The company’s shares fell 0.9 percent in New York yesterday to $31.19, extending its August decline to 13 percent. The last time it lost more in a month was in June 2010, when the stock slumped 14.5 percent. Its Tel Aviv shares lost 11 percent in August to 126 shekels, or the equivalent of $31.22.
Ceragon slid 0.6 percent to $6.87 yesterday, pushing its monthly drop to 16 percent, the most since November. Its Tel Aviv shares declined 14 percent to 28.2 shekels, or $6.99.
“We all see what’s happening with the economy and this is slowing business down in Europe and also to a lesser extent in the U.S.,” Yoel Knoll, head of investor relations at Ceragon, said in a conference organized in Boston by Oppenheimer & Co. on Aug. 15. “These are, I would say, the high-margin markets, where you can sell your system for a better cost. So even a few percentage points has an impact on revenue.”
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.