Business in Brief: Mellanox Quarterly Earnings Beat Forecasts, but Shares Fall

Ex-Leader executives in talks to form brokerage venture with Jefferies; Mizrahi Tefahot looking to sell office space to raise cash; Tel Aviv shares end virtually unchanged.

The Mellanox officers in Yokne’am.
Ofer Vaknin

Mellanox quarterly earnings beat forecasts, but shares fall

Mellanox Technologies began Israel’s corporate earnings season on the right foot on Wednesday, reporting a 31% year-on-year increase in its second-quarter earnings and beating analysts’ forecasts. The first Israeli company to release quarterly earnings, Mellanox said net profit after adjusting for one-time factors grew to $42.7 million, or 87 cents a share, from $153.1 million, or 75 cents, a year ago. About half the earnings rise was due to its acquisition of EZchip, completed in February, but that still represented a 15% year-on-year gain and topped Wall Street expectations: The average estimate of analysts surveyed by Zacks Investment Research was for earnings of 83 cents a share on revenues of $212.3 million. For the quarter ending in September, Mellanox said it expected revenue in the range of $221 million to $227 million, compared with a forecast of analysts polled by Zacks for $224.6 million. Nevertheless, Mellanox shares were down a sharp 5.3% at $48.54 in New York late morning local time. (Omri Zerachovitz)

Ex-Leader executives in talks to form brokerage venture with Jefferies

The U.S. global investment bank Jefferies could become a player in the Israeli capital market. Negotiations are under way with a group of former top executives of Leader Capital Markets, led by ex-CEO Amit Vardi. They plan to buy Leader’s brokerage and underwriting units, that would become a joint venture firm with Jefferies. Based in New York, Jefferies offers investment banking, brokerage, research and asset management services but has no operations or representative in Israel. The sale of Leader Capital Markets, which is expected to be completed by the end of September at a price of about 25 million shekels ($6.5 million), was prompted by poor working relations between Vardi and Tzahi Apeloig, the chairman of Leader Investments, its parent company. After the sale, Leader Investments will be left with a 50% stake in the investment house Yellin Lapidot as its main asset.  (Assa Sasson and Michael Rochvarger)

Mizrahi Tefahot looking to sell office space to raise cash

Mizrahi Tefahot Bank is looking to sell eight floors it owns in Ramat Gan’s Moshe Aviv office tower for 300 million shekels ($78 million) to raise cash and improve its capital-adequacy ratio. The bank, Israel’s fourth largest, bought the office space 14 years ago and since then prices for office space in the area have ballooned. The bank should be able to record a 100 million-shekel gain from the sale if it obtains its asking price. It would lease back the space from the buyer. Mizrahi has the lowest cash reserves of Israel’s banks, which limits its ability to make new loans. Other banks are also seeking to raise cash and use it more efficiently by selling real estate assets, including Leumi, Discount and First International. Bank Hapolaim, by contrast, leases most of its office space. However, when Mizrahi proposed doing the same sale-lease-back deal three years ago, the Bank of Israel stepped in to block it. (Michael Rochvarger)

Tel Aviv shares end virtually unchanged

An end-of-the-session dip that erased earlier gains left Tel Aviv shares fractionally lower on Thursday. The TA-25 and TA-100 indexes both finished down less than 0.1% at 1,467.68 and 1,278.33 points, respectively, on turnover of 1.14 billion shekels ($300 million). Telecom shares dipped, with Partner Communications shedding 2.5% to end at 18.40 shekels and Bezeq off 1.1% at 7.62. Cellcom Israel, which said just as trading ended that it won an interim injunction blocking the Golan Telecom-Hot tie-up, lost 1.4% to 26.24. Mazor Robotics ended down 2.4% at 38.37. Volume leader Teva Pharmaceutical Industries finished 1.1% higher at 212.70 after saying it was raising another 4 billion euros ($4.4 billion) to top off a $15-billion bond issue this week. Mylan rose 1.5% to 180.50. A rally in Ceragon shares that saw them surge nearly 50% over nine trading sessions came to abrupt halt Thursday, with the price tumbling 10.6% to end at 8.42 shekels. (Shelly Appelberg)