Technology is in and telecoms are out: EZchip knocks HOT off TA-25 index
In the U.S., three Israeli companies join the key Russell 3000 index.
Fast-growing EZchip Semiconductor will dislodge HOT Telecommunication Systems from the Tel Aviv Stock Exchange's benchmark TA-25 index, the TASE announced Sunday. The change will be made on June 17.
EZchip is joining the index even though its stock has tumbled 18% over the past few months. HOT has suffered worse problems. EZchip, based in Yokne'am, has experienced strong growth in recent years, but it still needs to overcome strong competition in its subsector - the manufacturing of network processors for routers.
HOT's stock suffered a brutal May. True, HOT launched HOT Mobile, but investors are worried that mounting competition in the telecom industry will spread to television. The company's shares tumbled 30% over two weeks. On May 31, the owners offered to pay shareholders a 17% premium over the stock's trading price; the share recovered, but it still got knocked off the TA-25.
Meanwhile, four companies have been promoted to the TA-100 index; one is Mivtach Shamir Holdings, a joint owner of Tnuva. Mivtach Shamir resumed trading in March after a two-year suspension following a controversy over the publishing of Tnuva's financial results. Another entry into the index is Internet technology star Babylon, whose shares have surged four-fold this year on the company's strong growth.
The other firms entering are underwear maker Delta-Galil Industries and Brack Capital Properties NV. Brack has made a series of purchases in recent months and is beginning to win positive coverage from Israeli analysts.
Six companies lost their places on the TA-100, including two atop the same telecom pyramid: Internet Gold - Golden Lines and B Communications. Both are under the hood of Bezeq, which in turn owns Pelephone.
The others include Kardan NV, whose stock plunged 70% over the past year due to real estate and financial losses in Eastern Europe, China and other emerging markets, and Eliezer Fishman's Industrial Building Corp., which plans to merge with sister company Jerusalem Economy.
The other two are David Ezra's Neto M.E. Holdings food conglomerate, which controls Neto Malinda Trading and Agricultural Produce Marketing, and Shemen Oil and Gas Resources, whose stock has lost 40% of its value since hitting the market in early December.
Comverse, Sapiens, Photomedex
Comverse Technology, Sapiens International NV and Photomedex will be joining the Russell 3000 index at the end of the month. The index, which competes with the S&P 500 and includes stocks trading on the New York Stock Exchange, the Amex and Nasdaq, set its annual lineup at the end of May. The changeover takes effect at the end of June.
Companies reach the index based on market value. Sapiens and Photomedex are dual-listed on the TASE.
Russell Investments also announced changes to its Russell Global Index, with nine Israeli companies joining and 15 dropping out. The companies entering are Delta-Galil, Formula Systems, Oridion, Caesarstone, Babylon, Plasson Industries, Taro Pharmaceutical Industries, Avgol Industries and Magic Software Enterprises.
The companies leaving are Scailex Corp., Elco Holdings, Property and Building Corp., Granite Hacarmel Investments, Alon Holdings Blue Square Israel, Carasso Motors, Discount Investment Corporation, IDB Holding, Hadera Paper, Electra Consumer Products, B Communications, Internet Golden Lines, Delek Israel, Nova Measuring Instruments and Suny Electronic.