Ceragon, Orbotech Slump on Revenue Forecasts: Israel Overnight
Ceragon Networks Ltd. (CRNT), the Tel Aviv- based maker of wireless-networking systems, fell the most in 10 years in New York after reducing its revenue outlook on concern global economic growth will falter.
Ceragon, which tumbled 15 percent in Tel Aviv yesterday to 32 shekels, or the equivalent of $8.69, lost 0.3 percent to 31.90 shekels as of 9:52 a.m. today. The U.S.-traded shares dropped 17 percent yesterday to $8.57, the most since September 2001 and the biggest decline on the Bloomberg Israel-US 25 Index of the largest New York-listed Israeli companies. Orbotech Ltd. (ORBK), which makes equipment to test screens of smartphones and tablets, retreated 6.4 percent to $10.08 after its revenue forecast trailed analysts’ estimates.
Mounting concern that Europe’s most indebted countries will slow global growth has led phone-service providers to cut costs, dimming the outlook for companies that depend on them for sales, said Lawrence Harris, an analyst at CL King & Associates in New York. Alcatel-Lucent SA, France’s largest telecommunications- equipment maker, reduced its full-year profit margin forecast last week.
“The macro economy has gone more challenging and carriers tend to cut back on capital spending if they see lower growth,” said Harris, who has a “neutral” rating on Ceragon shares. “The slower outlook is forcing people to reassess their guidance for 2012.”
The Bloomberg Israel-US 25 Index rose 0.7 percent to 89.01. The Tel Aviv benchmark TA-25 Index was little changed at 1,111.71. Israeli markets opened and closed late yesterday due to a general strike.
Ceragon reported a third-quarter loss of $6.7 million, after a profit of $4.6 million a year earlier, as it recorded $5.7 million in costs associated with the acquisition of Nera Networks AS in January.
The company, which had expected sales to grow at a 20 percent to 25 percent rate next year, now expects an increase at half that rate, Chief Executive Officer Ira Palti told analysts during a conference call yesterday.
“We do expect to continue growing, but at a little bit slower rate because of the macro economy and the situation in India,” he said. “India has a few local issues with telecom regulations and we expect it to be in the same situation until the middle of the next year.”
India amended phone-license rules last year, requiring equipment vendors to allow authorities to inspect telecommunication source code for security threats.
Ericsson AB, the world’s largest maker of wireless networks, expects less investment in networks in North America in the second half of this year, Chief Executive Officer Hans Vestberg said in an interview on Bloomberg TV on Oct. 20.
Orbotech said it expects 2011 earnings of $1.36 to $1.40 per share, below the $1.50 median estimate of five analysts surveyed by Bloomberg. Revenue for this year will reach $570 million, below the $573.8 million that it had forecast.
“The existing global economic uncertainty has impacted commercial and consumer spending, causing a number of printed circuit board manufacturers to delay the receipt of new manufacturing equipment,” Chief Executive Officer Raanan Cohen said in a statement distributed by Business Wire yesterday.
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.
Israel, whose population of 7.7 million is similar to Switzerland’s, has about 60 companies listed on the 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.
The shekel was little changed at 3.6831 against the dollar.
Israel’s budget deficit more than doubled to 4 billion shekels ($1.1 billion) in October from a revised 1.7 billion shekels a month earlier, the Finance Ministry said in an e- mailed statement yesterday. Overall tax revenue fell 12 percent to 15.5 billion shekels, it said.
Trading on the Tel Aviv Stock Exchange was delayed to 11 a.m. yesterday and closed late, at 5 p.m., after the National Labor Court cut short a general strike by Israel’s Histadrut labor federation that briefly halted trading and shut banks.
Teva Pharmaceutical Industries Ltd. (TEVA), the world’s largest maker of generic pharmaceuticals, gained 1.9 percent to $41.72. The Tel Aviv shares gained 0.3 percent to 152 shekels, or the equivalent of $41.29. The premium for the New York shares the highest among the biggest Israeli companies traded in both markets. Teva gained 0.7 percent to 153 shekels, or $41.55, today.
Teva has priced $5 billion of senior notes in six tranches to help repay debt, according to a regulatory filing.
Allot Communications Ltd. (ALLT), Israel’s biggest maker of high- speed networking equipment, climbed 1.4 percent to $15.29. The shares in Tel Aviv gained 0.4 percent to 57 shekels, or the equivalent of $15.48.
The company will benefit from rising demand for smartphones and the “mobile Internet tsunami,” CNBC’s Jim Cramer said after the close last week.
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