Perion CEO Says Google Won’t Hit Sales: Israel Overnight
Perion Networks Ltd. (PERI) gained to a record after its chief executive officer said revenue will rise this year even as the Israeli company meets new guidelines set by Google Inc. (GOOG) for use of its search engine in products.
Shares of Tel Aviv-based Perion gained 0.8 percent to a record 46.18 shekels, or the equivalent of $12.35, at the close in Tel Aviv. Trading was 1.3 times the three-month average trading volume. The benchmark TA-25 (TA-25) equities index slipped 0.5 percent to 1,217.76.
“Our 2013 forecast takes into account that in the short term there may be a negative effect on the business as a result of the new changes required by Google,” CEO Josef Mandelbaum said in a Jan. 8 phone interview from Tel Aviv. “But these changes will have no negative impact on the business.”
Perion (PERI)sells e-mail, photo sharing and Internet security products that often come packaged with Google’s search engine. The stock posted its biggest decline in six months in December on concern new rules designed to regulate third-party distribution of Mountain View, California-based Google’s engine would reduce sales, according to Chardan Capital Markets LLC. Perion was asked to make the changes, which come into force Feb. 1, to guarantee “transparency,” Mandelbaum said.
The New York shares soared 32 percent last week to $12.14, the biggest weekly jump since July 2009, after the company forecast sales this year that exceeded analysts’ estimates.
“Perion apparently feels very comfortable with their relationship with Google,” Jay Srivatsa, managing director of equity research at Chardan, said in a phone interview from Las Vegas Jan. 11. “If they didn’t believe that things were secure with Google, they wouldn’t have gone to raising guidance.”
The new rules are aimed at making it clear to users that download Internet products featuring Google from distributors like Perion that they are giving that company management of the program’s operations, said Srivatsa. Third-party distributors make money when their customers use Google’s search engine, he said.
Google confirmed that it had tightened rules for use of its search engine by third-party distributors. “We recently announced that we are updating our ads policies and stepping up enforcement in order to ensure that users have a safe, trustworthy experience online,” Aaron Stein, a spokesman for Google, said in an e-mailed statement Jan. 11.
Sales in 2013 will exceed $110 million, Perion said in a Jan. 8 statement, beating the $102 million average of two analysts’ estimates compiled by Bloomberg. Revenue is expected to have increased 70 percent last year compared to 2011.
Earnings per share on an adjusted basis in 2013 will reach $1.61, Perion said, compared with an average of three analysts’ estimates for $1.31. Fourth-quarter revenue will reach $21 million, the company said, compared with an $18.1 million median estimate.
To contact the editor responsible for this story: Emma O’Brien at email@example.com