Two days without trading have left Allot Communications Ltd. and Ceragon Networks Ltd.’s New York shares at the biggest premium to their Tel Aviv stock in at least a month after disappointing third-quarter earnings pushed the Israel-traded equities lower.
Allot, the developer of technology that helps wireless carriers manage traffic, sank to a five-month low yesterday in Tel Aviv, increasing the New York share premium by the most since Sept. 28. Ceragon, which sells its gear to telecommunication operators and Internet service providers, extended its three-day decline in Israel to 20 percent, widening the gap by the most since July 2011. U.S. bourses are scheduled to open today after trading was halted for two days because of Hurricane Sandy.
Ceragon, based in Tel Aviv, reported guidance that trailed estimates. The second half of 2012 has been “slower than everyone originally expected,” Chief Executive Officer Ira Palti said in an Oct. 29 investor conference call. Hod Hasharon, Israel-based Allot reported third-quarter revenue of $27.77 million, short of the $27.87 million average estimate of 10 analysts surveyed by Bloomberg.
“The spreads should come back to historic norms,” John Gualy, a partner at Eagle Global Advisors LLC in Houston and portfolio manager for the Timothy Plan Israel Common Values Fund, which manages about $9 million, said by phone. “Ceragon has been struggling for a while and has taken a big plunge since July. Allot has sold off some from its highs but the longer-term opportunities are still there.”
Israel’s TA-25 Index rose 0.4 percent to 1,214.22 at 10:24 a.m. in Tel Aviv. The Bloomberg Israel-US Equity Index of the largest New-York traded Israeli companies closed on Oct. 26 at 83.09 after falling for a third consecutive week.
The New York Stock Exchange expects to open as usual after its facilities were closed for two days as Hurricane Sandy blasted Lower Manhattan with floods and 90-mile-per-hour winds. U.S. exchanges reopened a day after Sandy barreled up the East Coast forcing hundreds of thousands of evacuations in New York City and the surrounding region.
Allot’s shares fell 0.5 percent to 85.89 shekels yesterday in Tel Aviv, or the equivalent of $22.10, after executives said a measurement of future revenue known as book-to-bill was below one, the normal level, according to Gualy. Allot’s New York-traded stock closed on Oct. 26 at $22.78. Allot said 44 percent of its third-quarter sales came from the Americas compared to 38 percent in the second quarter.
“Their book-to-bill was below one, which was negative,” Catharine Trebnick, an analyst at Northland Securities Inc., said by phone from Minneapolis yesterday about Allot. “But they’ve been trying to break into North America for three years, so the good news is that they’re getting traction in the U.S.”
Ceragon fell 1.5 percent in Tel Aviv to 17.24 shekels, or the equivalent of $4.44 compared to the company’s New York shares which closed on Oct. 26 at $5.25. The New York shares have lost 32 percent this year.
The company said on Oct. 29 that third-quarter revenue rose 2 percent to $118 million, below the $121.1 million mean estimate of seven analysts surveyed by Bloomberg. Revenue for the “next several quarters will be flat off a base of $104 million to $110 million” in the fourth quarter, Palti said.
The lower-than-expected guidance comes at a time when telecommunications equipment providers Nokia Siemens Networks Ltd. and French competitor Alcatel-Lucent SA are cutting jobs and costs as the slowing global economy crimps spending on infrastructure for mobile networks.
Kamada Ltd., a maker of treatments for hereditary lung diseases, soared to the highest level in almost 18 months in Tel Aviv yesterday as a newspaper reported the company is in talks with underwriters for a share sale in the U.S.
The Nes Ziona, Israel-based company’s shares gained 0.5 percent to 30.96 shekels, or $7.96. Kamada may raise “tens of millions of dollars” in the sale, the Globes business daily reported without citing its source for the information.
“We don’t comment on rumors,” Chief Executive Officer David Tsur said in a telephone interview yesterday. “The company has been approached by investment bankers numerous times in the past and once a decision is made we will update the market.”