Cyber Attacks a Boon to Radware Sales: Israel Overnight

Radware Ltd. may end two years of slower sales growth as cyber attacks on U.S. lenders including Bank of America Corp. bolster demand for the Israeli company’s security software, Chief Executive Officer Roy Zisapel said.

“Banks and the financial sector are looking for the carriers to provide some kind of protection for them,” Zisapel said yesterday at an investor meeting in New York. “That’s where the opportunity is for us in the coming years.”

Shares of the Tel Aviv-based company, which rallied 10 percent in January, marking the best start to a year since 2004, slipped 0.8 percent to $35.36 in New York yesterday. The Bloomberg Israel-US Equity Index of the largest New York-traded Israeli stocks rose to the highest level in a month. MagicJack VocalTec Ltd. led gains on the index, while Elbit Systems Ltd. jumped after a report that it gained a satellite contract.

Radware’s revenue expansion has slowed an average 34 percentage points since 2010, according to data compiled by Bloomberg, as the company faced contracting economic growth in Europe, part of its second-biggest market. That trend should reverse as the company receives more contracts with financial firms and service providers, Zisapel said. The websites of major U.S. banks including Bank of America and JPMorgan Chase & Co. faced renewed cyber attacks in December that caused disruptions and slowdowns for online customers.

“Bank of America has a lot of security tools in their infrastructure, and still they’re going down,” Zisapel said. “That’s the challenge, and that’s where we’re unique.”

Growth Focus

The Bloomberg Israel-U.S. gauge added 0.5 percent to 88.47, the highest level since Jan. 2. Israel’s benchmark TA-25 Index rose 0.1 percent to 1,220.03 as of 9:54 a.m. in Tel Aviv.

Radware’s revenue has trailed analysts’ estimates for the past three quarters after beating projections in the previous 11 earnings periods, according to data compiled by Bloomberg. Faster growth in Europe, the Middle East and African -- where it received 35 percent of revenue in 2011 -- combined with continued growth in the U.S. should boost sales acceleration, Zisapel said.

Other technologies developed by Radware will drive faster sales growth this year, Alex Henderson, a New York-based analyst at Needham & Co., said by phone yesterday.

“The ability to isolate applications, that is what ultimately drives performance over time,” said Henderson, who has a buy rating on the stock. Radware’s security business will grow “at a good clip,” he said.

Strangeloop Networks

Radware announced on Feb. 7 that it purchased Strangeloop Networks, which provides online applications for e-commerce, for $8.4 million in cash. The acquisition, which will be integrated in Radware’s FastView product, will help customers speed up website response times, Zisapel said.

The company plans to focus on growth as a way to boost shareholder value instead of trying to attract buyers, Zisapel said. Radware’s shares jumped 21 percent on Dec. 6, 2010 after Israeli newspaper Calcalist reported Riverbed Technology Inc. would seek to acquire it.

“Every offer that comes goes to the board,” said Zisapel, who holds a 3.4 percent stake in the company, according to data compiled by Bloomberg. His father Yehuda Zisapel is the largest shareholder, with a 15 percent stake. “As a private shareholder, I can tell you that I don’t think a 10 percent, 20 percent, or 30 percent premium makes sense. Maybe the board will approve, but I would vote against.”

Satellite Contract

MagicJack, the Netanya, Israel-based company whose founders invented the technology used to make telephone calls over the Internet, gained 4.7 percent to $13.66, the highest price in two weeks. Shares have lost 14 percent in the past three weeks.

Elbit Systems, Israel’s largest non-government defense company, climbed 4 percent to $38.98 in New York, the biggest jump in a month. ImageSat International NV, a provider of satellite earth-imagery, may order an EROS satellite from Israel Aerospace Industries Ltd. and Elbit’s Elop Ltd. unit in a contract worth more than $100 million, daily Yedioth Ahronoth reported yesterday, without saying where it obtained the information. Elbit shares traded in Tel Aviv gained 0.7 percent today to 144 shekels, or the equivalent $38.92.

Perrigo Co., the largest U.S. maker of generic over-the-counter drugs, rose 2.9 percent $111.4, the highest price since Nov. 6, after purchasing U.K.-based Rosemont Pharmaceuticals Ltd. for about $283 million. Shares traded in Tel Aviv rose 1.5 percent to 412.30 shekels, or $111.43, today.

Perrigo, which bought B’nei Brak, Israel-based Agis Industries Ltd. in 2005, boosted its 2013 earnings forecast to a range between $5.53 and $5.73 a share. This compares with an average $5.57 estimate of 15 analysts surveyed by Bloomberg.

“This introduces another platform for which we could see additional deal activity going forward, and, importantly, adds diversification to the more volatile U.S. prescription business,” Randall Stanicky, an analyst at Canaccord Genuity in New York, wrote in a note to clients yesterday. He rates the shares buy.

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