20 August 12 17:59–Despite European troubles, despite the slowdown in China, despite the fact that the results season signaled a problematic third quarter, and despite the talk about an Iranian bomb being closer than ever, the market surprised everyone and gave us a classic July-August summer rally. The Dow Jones and S&P 500 indexes have been galloping forward for six weeks, while the Nasdaq has made do with five.
The market’s last low was recorded on June 1. Since then the Nasdaq index has climbed 12%. But whoever examines what has happened to Israeli technology stocks in that period will discover that, apart from Mellanox Technologies Ltd. (Nasdaq:MLNX; TASE:MLNX), whose share price almost doubled, most stocks fell, or failed to rise substantially. This has nothing to do with the fear of a nuclear-armed Iran, but is a matter of specific problems in the companies themselves, as we shall shortly see.
Incidentally, if anyone is trying to estimate the consequences for specific stocks of a missile war in our region, a non-Israeli giant from the Dow Jones list will sustain a sharp decline if its plants here are shut down. The company in question is Intel (INTC) with its fab in Kiryat Gat. Every processor produced by the company here has an end user waiting for it, and temporary closure of the Kiryat Gat fab will be liable to hurt Intel’s results.
On the other hand, Israeli companies based here, such as Check Point Software Technologies Ltd. (Nasdaq: CHKP), Amdocs Ltd. (NYSE: DOX), EZchip Semiconductor Ltd. (Nasdaq: EZCH; TASE:EZCH), and others, that mainly develop software or chips that are manufactured in Taiwan, take care every evening to back up their development computers and to send the back-up copies to several places overseas, with or without any connection to the wars waged in our neighborhood every few years.
The rises in the technology gorillas since June 1 were led by Oracle (ORCL), Cisco (CSCO), Google (GOOG), and Apple (AAPL), which rose by 24%, 20%, 18%, and 16% respectively. As far as Apple is concerned, investors ended the sell-off that resulted from the expectation of a fall in sales of old-generation iPhones, and started to give the company a premium bringing it to a new all-time peak in advance of the “mother of all launches” of the new iPhone in about three weeks’ time…Read More>>