Mellanox Technologies Ltd. (MLNX) dropped
the most since December, narrowing the gap with New York-traded
shares after Stifel Nicolaus & Co. cut its recommendation on the
stock and Intel Corp. reduced its sales forecast.
The maker of technology used to transfer and store data
plunged 7.5 percent to 442.9 shekels, or the equivalent of
$111.44, at 1:23 p.m. in Tel Aviv. The New York shares closed at
$110.85 Sept. 7. Mellanox was the worst performer on the TA-25
benchmark index after leading declines on the Bloomberg Israel-
US Equity Index (ISRA25BN) in New York.
Stifel cut its recommendation on Mellanox to hold from buy,
saying the Yokneam Elit, Israel-based company may see slower
demand for its products. The current price reflects a fair
valuation, it said. Intel Corp. (INTC), the world’s largest
semiconductor maker, reduced its third-quarter sales forecast,
citing declining demand for personal computers from corporate
customers in a weakening economy.
“The big move is because of the compounding effect of the
Stifel downgrade and news from Intel,” Brian Freed, an analyst
at Wunderlich Securities Inc., said by phone from Denver on
Sept. 7. “Intel is a bellwether in the semiconductor industry
and you probably have people wanting to trim their exposure in
the sector.”
Intel Outlook
Intel agreed to buy QLogic Corp. (QLGC)’s InfiniBand business for
$125 million on Jan. 23 and in April said it will spend $140
million to acquire Cray Inc. (CRAY)’s technology to connect server
chips. The California company accounts for 2 percent of Mellanox
revenues, according to data compiled by Bloomberg.
Sales in the third quarter will reach $12.9 billion to
$13.5 billion, down from a prior projection of $13.8 billion to
$14.8 billion, Intel said in a Sept. 7 statement. Analysts had
estimated sales of $14.2 billion on average, according to data
compiled by Bloomberg.
Mellanox’s Israeli shares, which reached a record on Sept.
5, have more than tripled this year, surging 257 percent, the
biggest jump in the TA-25 Index. The company has a market value
17.6 billion shekels ($4.4 billion). Mellanox’s reported revenue
beat analysts’ estimates in each quarter since it went public in
2007.
“The current valuation reflects an interesting entry
point,” said Jonathan Kreizman, an analyst at Clal Finance
Batucha Brokerage Ltd. in Tel Aviv.
Mellanox has benefited from demand for its InfiniBand
technology, which is used in high-end computing and data
centers.
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