Mellanox Drop Shrinks Premium to Intel: Russia Overnight
Mellanox Technologies Ltd. (MLNX), the Israeli maker of equipment that speeds electronic data transfers, fell to a sixteen-month low in New York amid concern revenue will decline this year as customers cut spending.
Shares of Mellanox slid 1.3 percent to $40.46 in New York yesterday, shrinking its premium to Intel Corp. (INTC) The shares declined 0.7 percent to 142 shekels, or $39.88, at 11:36 a.m. in Tel Aviv. Alvarion Ltd. (ALVR), which surged almost sixfold since Aug. 14 on takeover speculation, plunged 24 percent in New York after a report that private-equity firm Sigma Wave Ltd. made an offer for the wireless communication equipment maker.
Mellanox will post the first annual decline in sales since at least 2004, according to the average estimate of 15 analysts surveyed by Bloomberg. The stock trades at 22 times estimated earnings, or double the valuation of bigger technology companies from Intel to Cisco Systems Inc., data compiled by Bloomberg show. San Jose, California-based Cisco forecast sales that missed most analysts’ estimates last week as companies and network operators postpone costly overhauls of their networks.
“Mellanox’s premium to peers isn’t justified until there is more visibility in terms of the web spending,” Andrew Nowinski, an analyst at Piper Jaffray Cos., said in a phone interview from Minneapolis yesterday. “We believe investors are still concerned with the limited visibility into spending trends in the back half of 2013.”
Nowinski cut Mellanox, which plans to delist from the Tel Aviv Stock Exchange Sept. 1, to the equivalent of hold from buy on July 25 and reduced his share-price estimate by 31 percent.
Sales at the Yokneam Elit, Israel-based company will decline 18 percent to $408.7 million this year, according to the average estimate of 15 analysts surveyed by Bloomberg.
Mellanox’s adjusted profit fell 68 percent in the second quarter to $13.8 million, the company said last month, exceeding the $8.46 million average estimate of 13 analysts surveyed by Bloomberg. Sales sank 26 percent, falling short of analyst projections, and the company forecast third-quarter revenue between $104 million to $109 million, compared with an average estimate for $111.5 million.
Alvarion slumped to 88 cents in New York yesterday, the biggest decline in four weeks. The shares in Tel Aviv fell 13 percent to 3.14 shekels, or 88 cents, today.
Sigma is offering as much as 30 million shekels ($8.45 million) for the gear maker, Calcalist reported yesterday. The amount would represent a 22 percent discount on the company’s market value of $10.84 million as of Aug. 19, according to data compiled by Bloomberg.
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