Daily Roundup / Check Point Blames Revenue Miss on Strapped Europeans

Kadima fleeing coalition portends early elections. Brace for budget brouhaha as early elections loom.

* Check Point beats profit forecast despite revenues shortfall: Check Point Software Technologies beat profit forecasts for the second quarter of 2012 with a 13% in earnings per share to 77 cents, versus the forecast of 76 cents. But revenues fell short of expectations, rising 9% compared with the parallel quarter of 2011, to $328.6 million; analysis had fondly expected $331.4 million, on average. Nu? CEO Gil Shwed blames the slowing European economy and professed to be "pleased" with the company's results.

* IDB securities bounce on Credit Suisse profit rally: Shares and bonds of various IDB group companies rebounded nicely on the Tel Aviv Stock Exchange yesterday thanks to a jump in profit at Credit Suisse, which also announced various efficiency measures. IDB is invested in the Swiss bank through group company Koor Industries, shares of which were up 1.5% in mid-afternoon trading. IDB Holding Corp, the company at the top of the IDB pyramid, was up a hefty 7.7% an hour before Tel Aviv's closing Monday. IDB Holding bonds were leaping between 1.5% (the B3 series) and 2.8% (the B4 bonds). Earlier in the day Credit Suisse announced netting 788 million Swiss francs in the second quarter, up 2.6% from the same quarter of 2011. Shares of Credit Suisse were up nearly 4% in afternoon trading in Zurich on Monday.

* Banks may lose their credit card subsidiaries: Israel's antitrust commissioner was underwhelmed by the recommendations of a public committee to spur interbank competition, and is coming up with his own list of reforms. One will evidently be to force the banks to sell their credit-card subsidiaries, as they were forced some years ago to sell their holdings in prudential and mutual funds in order to minimize conflicts of interest. The commissioner, David Gilo, also wants it to be easier for customers to switch banks; he may also decide to let small banks merge with investment banks, presently a big no-no-, in order to pose truer competition to the biggest banking groups Hapoalim, Leumi and Discount.

* State bankrupting the young? Eroding welfare allowances coupled with mushrooming housing prices and the rising cost of living have been increasingly reducing Israel's young to poverty, warns the National Insurance Institute. The tax cuts instituted by the Netanyahu government have mainly benefited older people who earn more, the institute says in an analysis by Daniel Gottlieb. He notes that the number of homeowners among adults aged less than 35 has plunged 15% in the last ten years, while the spending of this age group on rent has increased by 25%.

* A taxing conundrum: Speaking of bankruptcies, Knesset member Zahava Gal-On of the left-wing Meretz party demanded on Wednesday that the attorney general block a Knesset vote this coming Sunday on the bill governing tax on "trapped profits" – profits that multinational companies would dearly love to take out of Israel to spend elsewhere, but if they do, they'd owe a lot of tax. The bill reduces that tax. To where, seems to be the million-shekel question. To put things into proportion, in 2008 big business paid only 7.2% of their income in tax, while the law stated they should pay 27%. "The final draft of the bill… includes a flat discount of 50%," Gal-On wrote to attorney-general Yehuda Weinstein. In short, the bill changes the rules of the games for the biggest companies, which would pay very low tax, she argues and threatens to sue at the High Court of Justice if the bill wins favor in parliament.

* Israel likely to start 2013 with no budget in place: Kadima bolting the coalition on Tuesday have made early elections have become much likelier. That in turn means the Netanyahu government will have little stomach to do unpopular things like slash budgets and jack up taxes; and that in turn means it's highly unlikely to pass any budget at all for 2013. If that happens, spending will be constrained. Each month the government may spend 1/12 of the previous year's budget and not a shekel more; nor may the government or Knesset decide on any new expenditures until a new budget is in place.