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Tower Drops Most in 2 Months as Sales Disappoint: Tel Aviv Mover

Tower Semiconductor Ltd. tumbled the most in almost two months after the Israeli chipmaker’s second-quarter sales disappointed investors.

The shares slumped 7.1 percent, the most since June 13, to 16.4 shekels at the close in Tel Aviv, on 1.7 times the three-month daily average volume. The stock has plunged 44 percent this year, compared with a gain of 3.4 percent for the Bloomberg World Semiconductor Index.

Tower said today revenue for the three months through June fell 26 percent to $125 million, compared with its May forecast of between $122 million and $132 million in sales for the period. Lower output from Tower’s former Micron Technology Inc. factory in Japan’s Nishiwaki City contributed to the drop, it said. Its results have missed estimates in the past seven quarters, data compiled by Bloomberg show.

“The numbers were light relative to guidance,” Jay Srivatsa, an analyst at Chardan Capital Markets LLC in Tel Aviv who has a buy rating on the shares, said by phone today. “Although there has been a modest improvement in the networking sector, PC’s are still weak and we need to see a broad-based recovery.”

Global personal computer shipments continue to drop, according to a Bloomberg Industries report on July 11 that cited preliminary second-quarter IDC data. Commercial sales may rise in the second half as corporations replace their Windows XP-driven computers, Bloomberg Industries analysts George Mykytyn and Anand Srinivasan said in May.

Sales may also increase due to seasonally strong second-half spending in corporate, government and education markets, they said.

Tower shares trade at 3.3 times 12-month estimated earnings, compared with a multiple of 12.5 times for Taiwan Semiconductor Manufacturing Company Ltd., which makes and markets integrated circuits.

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