Tech Exporters Jump as Deals Beat Europe Woes: Israel Overnight
Allot Communications Ltd. (ALLT), Israel’s biggest maker of high-speed networking equipment, jumped to a two-month high in New York yesterday, limiting losses in the country’s stocks traded in the U.S., after signing a contract.
Allot, based in Hod Hasharon, Israel, gained 8.3 percent to $13.20, after announcing plans to sell hardware to an Asian telephone service provider. The shares lost 2.3 percent at the 4:30 p.m. close in Tel Aviv today. Radware, which makes technology to help networks run more efficiently, rallied to the highest in a month yesterday after winning a contract to provide software to Juniper Networks Inc. (JNPR) The Bloomberg Israel-US 25 Index of the largest Israeli companies traded in New York fell 1.6 percent, with SodaStream International Ltd. (SODA) plunging 8.9 percent.
The new business won by Allot and Radware is reassuring investors that demand for the companies’ technologies will persist even as global expansion slows, said Chaim Fromowitz, the head of private banking at New York-based Bank Leumi USA. Israel signed a cooperation accord with China’s economic planning agency in July to increase trade with Asia as growth in the U.S. and Europe are hindered by the euro-area debt crisis.
“Many of the technology companies are seeing the growth as well as the openness to newer technology” in Asian countries, Fromowitz said. “It’s only natural they would try to garner their piece of the market.”
The agreements were announced as U.S. consumer confidence fell to the lowest level since March 2009 and the cancellation of a European finance ministers’ meeting sparked concern that the countries will be unable to reach an agreement on taming the debt crisis. The Standard & Poor’s 500 Index dropped 2 percent and the Stoxx Europe 600 fell 0.7 percent, both off the highest values in more than two months.
The shekel weakened for a third day, slipping 0.1 percent to 3.6557 a dollar at 5:37 p.m. in Tel Aviv. Israel’s benchmark stock index, the TA-25, rose 0.5 percent to 1,140.48.
Allot sold $9.5 million of networking equipment to an unidentified Asian fixed-line operator, the company said in a statement. Shares of the company fell to 47.61 shekels, or the equivalent of $13.03, in Tel Aviv today.
The sale demonstrates the company’s ability to increase revenue in regions beyond Europe, said Daniel Meron, an analyst at RBC Capital Markets.
“The size of the order, the timing of the order, kind of highlight that this is not just a play on Europe,” Meron said.
More than half of Allot’s revenue came from Europe last year, while 22 percent came from Asia and Oceania.
About a quarter of Israeli exports went to European Union countries in the first eight months of this year and 23 percent went to Asia, according to a Sept. 18 statement from the Central Bureau of Statistics. The U.S. was the country’s biggest trading partner, accounting for 30 percent of exports.
Allot’s European business hasn’t been affected by macroeconomic conditions there, Ittai Kidron, an analyst at Oppenheimer & Co. wrote in an Oct. 23 research note. He said the company “is again on track to deliver solid quarterly results and guidance” when it reports earnings Nov. 1.
Israel, whose population of 7.7 million is similar to Switzerland’s, has about 60 companies listed on Nasdaq, the most of any country outside North America after China. It is also home to the largest number of start-up companies per capita in the world.
Israeli technology companies raised $522 million in capital during the third quarter of 2011, $47 million less than in the second quarter, according to the Israel Venture Capital-KPMG Quarterly Survey released Oct. 24.
Radware, based in Tel Aviv, will provide software that helps manage network traffic for some routers made by Sunnyvale, California-based Juniper. It’s the first time that Radware’s software, known as an application delivery controller, will be integrated into the devices, said Yossi Vardi, Radware’s vice president for business development.
The venture will help Radware benefit from increasing network traffic as more people stream videos and use other data- heavy applications on the Internet, he said. Vardi declined to comment on the deal’s value.
The deal could add $10 million in revenue for Radware next year, increasing earnings by at least 8 cents per share, said Rohit Chopra, an analyst at Wedbush Securities.
Mellanox Technologies Ltd. (MLNX), the maker of adapters for servers that’s part owned by Oracle Corp., retreated 1.1 percent to 120.90 shekels, or $33.07, today. The New York shares fell 3.7 percent to $32.64, trimming its gain for the year to 25 percent.
Mellanox reports earnings for the third quarter today after the close of trading in New York.
EZchip Semiconductor Ltd. (EZCH), the Yokneam, Israel-based maker of network processors, decreased 3 percent to 131.40 shekels, or $35.94 in Tel Aviv today. The shares fell 5.4 percent to $35.52 in New York yesterday.
SodaStream, the Israeli producer of homemade soda machines, fell the most in three weeks to close at $31.77, extending a decline exacerbated by comments hedge fund manager David Einhorn made on Oct. 17 about Green Mountain Coffee Roasters Inc. There may be less demand than anticipated for SodaStream’s products, said Francis Gaskins, president of Ipodesktop.com, which tracks the IPO market.
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