30 July 12 18:12–When they go wild on Wall Street as only American cowboys can, then you sometimes get a daily rise of tens of percentage points, as happened in the case of Mellanox Technologies Ltd. (Nasdaq:MLNX; TASE:MLNX) two weeks ago. Sometimes it’s the reverse, and painful, as in the case of Radware Ltd. (Nasdaq: RDWR) last week. In both cases, innocent investors are left with gaping mouths, and don’t understand what is going on.
I would guess that Radware founder and CEO Roy Zisapel too was stunned last week, when he saw that between the high and the low, the cowboys shaved nearly quarter of a billion dollars off the value of his company, in response to results and guidance within expectations, the kind that not even his strongest rivals had been able to provide. The Radware story is one of a cancelled wedding, a frustrated analyst, and one or more hedge funds that laid a roadside bomb for the stock.
In mid-May this year, US analyst Ittai Kidron, who covers Radware for Oppenheimer, found out about a huge deal that was about to be signed with Juniper Networks (JNPR). He wrote that, over several years, Juniper would pay Radware $70-100 million that would go straight to the latter’s bottom line, in exchange for integrating Radware’s unique technology in its QFabric family of switches for data storage centers. He also stated that Riverbed (RVBD) bid for the contract, but that Radware apparently won it because of a previous successful OEM agreement with Juniper.
Kidron was so sure about the deal that he even held a conference call with investors, an extraordinary step, and explained that if it went ahead it would mean substantial additional earnings per share that could lead to a much higher price for Radware.
Since then, the weeks have gone by, and although Kidron had the wedding ceremony all arranged, the couple failed to turn up, and last Tuesday, after the close, Juniper announced that the deal had actually been signed with Riverbed…Read More>>