AudioCodes Reaches 2-Year High on Sales to Microsoft
AudioCodes Ltd. (AUDC), the Israeli company whose Internet calling technology is used by Microsoft Corp. (MSFT), jumped to a two-year high on speculation annual sales will grow at the fastest pace in three years.
Shares of the technology company advanced 2.5 percent to 25.56 shekels, or the equivalent of $7.24, at 9:58 a.m. in Tel Aviv. The U.S.-traded shares yesterday closed at $7.29. The Bloomberg Israel-US Equity Index of the most-traded Israeli companies in New York climbed 1.2 percent to 100.93.
AudioCodes posted the biggest quarterly gain in three years after Microsoft said in July that its Lync business, which uses the Israeli company’s technology, grew 30 percent in the second quarter from the first and is set to expand by “double digits.” AudioCodes’ sales will increase 7.5 percent in 2013, the most since 2010, according to the average of two analyst estimates compiled by Bloomberg.
“They have more potential revenue for future years than they are recognizing now,” Andrew Uerkwitz, an analyst at Oppenheimer & Co., said by phone from New York yesterday. “They should be able to meet management’s target long-term sustainable sales growth rate of 15 percent.”
Skype & Yammer
Microsoft said on Sept. 19 that it plans to merge Lync, which provides phone, video, and instant messaging services, with other communications products including Skype and Yammer.
“The combination is a move to form a $3.2 billion business that provides the best services to corporations and AudioCodes is a key supplier for this business,” Mandeep Singh, analyst for Bloomberg Industries in New York, said by phone yesterday.
AudioCodes, based in Lod, Israel, expects the Lync business to grow 30 percent in 2013, Chief Executive Officer Shabtai Adlersberg said on a July 30 conference call. The company increased its annual forecast for adjusted earnings to a range of 12 cents to 15 cents a share from a previous projection of 10 cents to 14 cents.
“Microsoft said that the Lync system is incorporated in 70 percent of Fortune 500 companies, but the majority of those are not using voice nor have they fully implemented it across their companies,” said Uerkwitz, who has the equivalent of a buy recommendation on the stock. “There is room for these companies to invest more in Lync, which would continue to be accretive to AudioCodes.”
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