9 August 12 13:25–”The collapse in the share price of EZchip Semiconductor Ltd. (Nasdaq: EZCH; TASE:EZCH) today and the fall in Tower Semiconductor Ltd. (Nasdaq: TSEM; TASE: TSEM) following the publication of their financial reports and disappointing guidance is a reminder for everyone who has forgotten, or who never grasped, the risk side of the risk-reward equation inherent in investing in technology shares in general and in Israeli technology shares in particular,” Ayalon Group chief strategist Yaniv Pagot said today.
Pagot added, “Last week, NICE Systems Ltd. (Nasdaq: NICE; TASE: NICE) gave a similar reminder, and it seems that the global economic slowdown will not miss the technology industry for long, as seen is the lower guidances by companies and longer sales processes, due to reduced capital investment by customers.”
Pagot says that most Israeli technology companies, no matter successful they have been, are still and will probably always be niche technology companies on the global scale, and will therefore be strongly dependent on the markets. Consequently, they will publish good results in boom times, but there is also a strong risk during slowdowns.
“Investment managers of the dot.com generation remember the bitter taste of a slowdown on their profit multiples for pricing, and the consequent plunge in prices of well-regarded technology shares. In the current technology wave, many of them are again feeling a sense of ‘this time it’s different’, because the technology industry is at a peak, companies are profitable, and everyone is waiting for the iPhone 5 to refuel the technology party…Read More>>