Tower Gains as India Plant Report Boosts Outlook: Tel Aviv Mover
Tower Semiconductor Ltd. (TSEM) headed for the biggest increase in almost a month after Calcalist reported that the loss-making Israeli chip-maker won a bid for a project in India, boosting the profit outlook.
The shares climbed 3.3 percent, the most since May 28 on a closing basis, to 17.45 shekels at 2:23 p.m. in Tel Aviv. The benchmark TA-25 Index (TA-25) advanced 0.4 percent. Tower secured a bid for a chip-manufacturing plant in India as part of a consortium including International Business Machines Corp. (IBM), or IBM, and India’s Jaypee Infratech Ltd. (JPIN), Calcalist reported today, without saying where it got the information.
“This will help revenues and profits at the company and shows that the fundamentals are strong,” Eran Jacoby, head of research at DS Securities & Investments in Tel Aviv, said by phone. “It may also lead to additional ventures with IBM which is a positive for the company.”
As a result of the deal, Tower will have about $300 million in revenue over six years, according to the Calcalist report. Chief Executive Officer Russell Ellwanger last year forecast that winning the bid could add “hundreds of millions of dollars” to the company’s gross margin. Ellwanger said in May that a decision on the plant was expected that month.
More than 800,000 shares of Tower were traded today, almost three times the three-month daily average. A spokeswoman at the chip-maker, who asked not to be identified citing company policy, declined to comment when contacted by Bloomberg News today.
Tower shares have dropped 41 percent this year, lagging a gain of 1.5 percent for the benchmark index. The Migdal Haemek, Israel-based company has posted losses for the past six quarters, according to data compiled by Bloomberg.
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