Tower Falls Most in Year After Loss, Outlook: Tel Aviv Mover
Tower Semiconductor Ltd. (TSEM) dropped the most in a year after the maker of customized chips reported a second-quarter loss and said this quarter’s sales will fall short of analysts’ estimates.
The shares of the Migdal Haemek, Israel-based company fell 13 percent, the most since August 2011, to 36.30 shekels at the close in Tel Aviv. Tower tumbled 14 percent to $8.84 at 11:07 a.m. in New York, headed for the biggest drop since December 2008. EZchip Semiconductor Ltd. (EZCH) plunged 22 percent, the most since October 2008, to 118 shekels after second-quarter sales missed estimates by about 50 percent. Israel’s benchmark stock index lost 0.3 percent.
Tower posted a loss of $9.4 million compared with a profit of $1.7 million a year earlier, according to a statement filed with the Tel-Aviv Stock Exchange today. Third-quarter sales will be between $152 million and $162 million, Tower said in the statement. The mean estimate of three analysts is for sales of $174 million, according to data compiled by Bloomberg.
“The guidance is disappointing and it doesn’t look like they will get the $200 million in fourth-quarter sales that investors were expecting,” Eran Jacoby, head of research at DS Securities & Investments Ltd., said by phone from Tel Aviv. “This is overshadowing margin improvements they’ve been making.”
Tower said operating margins improved to 31 percent in the second quarter from 26 percent a year earlier.
“We are seeing some discrete markets declining as consumers move from PCs to tablets and smartphones,” Chief Executive Officer Russell Ellwanger said in a phone interview today. “And with the shift to these devices, we are seeing demand from our other customers, such as Skyworks Solutions Inc. (SWKS), whose technology is at the heart of all advanced smartphones.”
To contact the reporter on this story: Robert Lakin in Tel Aviv at firstname.lastname@example.org
To contact the editor responsible for this story: Claudia Maedler at email@example.com