Market report / EZchip leads tech shares lower
EZchip, a fabless chip maker specializing in Ethernet network processors, ended down 22% while TowerJazz, a semiconductor foundry, shed 12.5% and Magic Software, a maker of enterprise software, declined 6.7%.
The Tel Aviv Stock Exchange finished the trading week down mildly, but for technology stocks yesterday was a kind of Black Thursday.
EZchip, a fabless chip maker specializing in Ethernet network processors, ended down 22% while TowerJazz, a semiconductor foundry, shed 12.5% and Magic Software, a maker of enterprise software, declined 6.7%. The TA BlueTech-50 index dropped 2% to 337.87 and the TA-Technology index an even steeper 2.3% to 351.34.
The TA-25 index of blue chips fell 0.3% to a closing of 1,107.26 while the TA-100 dropped 0.4% to 996.10. The TA-Banking index also lost 0.4% to end at 819.60, while the TA-Real Estate index fell 0.7% to 249.98.
For the week, the TA-25 rose 1%, doubling its (paltry ) year-to-date performance to 2%. The TA-100 rose 1.2%, bringing its year-to-date gain to 1.8%.
The bond market was also lower. The Tel-Bond indices were down as much as 0.3% as government bonds extended their downward movement of the last several days. In unlinked shekel bonds, prices were down 0.3% on average while inflation-indexed bonds saw drops of about 0.4%.
The day had begun relatively quietly, with little movement at all in stocks. What changed the atmosphere was the European Central Bank, which lowered its forecast for economic growth in the euro zone next year and conceded that the situation overall is worse than it had previous stated.
The ECB now says that the Gross Domestic Product for the euro zone will be a mere 0.6% in 2013, down from a previous forecast of 1%.
Adding the the bearish sentiment, ratings agency Standard & Poor's on Tuesday revised Greece's outlook to negative, saying the debt-ridden euro zone country could need more help from its international creditors.
On the other hand, news from China was more positive. The country said its annual consumer inflation fell to a 30-month low in July, suggesting the central bank has scope to ease monetary policy to keep the economy on track to meet an official 2012 growth target of 7.5%.
In Tel Aviv, EZchip fell after it warned yesterday that revenue in the second half of the year would be less than previously forecast and that third-quarter revenue would be notably lower than in the second.
"It's a very disappointing short-term guidance that delays our expected revenue ramp, but we believe it is just a delay that does not change our long-term view," the company said.
Tower falls on bearish outlook
Tower said yesterday that revenue rose 21% to $168.6 million in the second quarter and pre-tax income by 42% from a year earlier. Nevertheless, it also indicated that revenue sales would be lower in the third quarter to a range of $152 million to $162 million.
Given Imaging, the maker of a camera in a pill used to diagnose digestive disorders, rebounded from its sharp drop on Wednesday, ending up 5.3% at the finish. The company indicated that initial results of its Pillcom 2 Colon device found that it could not be used as a substitute for a colonoscopy, which greatly reduces its market potential.
Teva Pharmaceutical Industries and Sweden's Active Biotech said on Wednesday that they are ready to begin a Phase III clinical trial for oral laquinimod, which is used in the treatment of relapsing-remitting multiple sclerosis. Unlike Teva's best-selling Copaxone, laquinimod is administered orally once a day. Teva share ended virtually unchanged yesterday.
Bank Leumi ended down 1.4% yesterday even as its mortgage unit reported a 56% increase in net profit in the second quarter from a year earlier, to NIS 85 million.
Tau Tsuot, which is seeking to hammer out a debt settlement with bondholders, on Wednesday published the result of a vote of its Series Aleph investors. Some 83% voted against immediate repayment. Before that, Tau reported that a trustee for the company had received a third-party offer to buy 75% of a Romanian land parcel for NIS 2 million. Tau shares ended unchanged, as did its Series Aleph bonds.
Reuters contributed to this report.