Ceragon Networks Discusses Increased Q2 Revenues and Raises FY08 Guidance
TUESDAY, JULY 22, 2008:
Wall Street turned in a mixed performance Monday as investors watched the price of oil regain ground and decided to cash in some of their gains from the stock market's big rally last week. While the market's major indexes showed modest losses, the number of stocks advancing outpaced decliners by about 2 to 1 on the New York Mercantile Exchange, and by about 4 to 3 on the Nasdaq Stock Market. The tame session unfolded as oil rose on concerns that the threat of new sanctions against Iran over its nuclear program could escalate tensions in the Middle East. Light, sweet crude rose $2.16 to settle at $131.04 a barrel on the New York Mercantile Exchange. The rise in oil offset initial market enthusiasm after Bank of America Corp. posted results that beat expectations, raising hope the credit crisis might be easing for the nation's biggest retail banks. The second-largest U.S. bank by assets reported that higher investment banking and record revenue helped drive earnings during the second quarter. With Bank of America's results, four of the nation's five biggest banks have now reported better-than-expected earnings, and that's raising hopes that the financial sector is starting to recover from the year-old credit crisis. Still, "with crude trading up near $130, and a big advance last week, some investors are taking chips off the table," said Jim Herrick, manager of equity trading at Baird & Co. "We're going to be in a tight trading range this week based on earnings and oil prices. I expect more of the same." The market was also uneasy about drug makers Merck & Co. and Schering-Plough Corp. Both pharmaceutical companies fell after a new study showed their cholesterol drug Vytorin did not meet its main goals.The Dow Jones industrial average fell 29.23, or 0.25 percent, to 11,467.34 after moving in and out of positive territory. Broader indexes showed more modest declines. The Standard & Poor's 500 index slipped 0.68, or 0.05 percent, to 1,260.00; and the Nasdaq composite index dropped 3.25, or 0.14 percent, to 2,279.53. The moves follow a strong week for the markets. The Dow last week rose 3.57 percent, while the S&P rose 1.71 percent and the Nasdaq increased 1.95 percent. Bond prices rose Monday as the major stock indexes declined. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 4.04 percent from 4.09 percent late Friday. The dollar was mixed against other major currencies, while gold prices rose. Ryan Detrick, senior technical strategist at Schaeffer's Investment Research, said the market is still feeling somewhat upbeat about how earnings are shaping up so far this quarter. And that's helped to maintain some of last week's market gains, despite the pullback on Monday. "We're having some more good news from the financials -- it wasn't as bad as feared," he said. "And we've also got some buyout deals."
Some 158 members of the Standard & Poor's 500 index and 10 of the 30 Dow industrials are slated to post results this week. One of the biggest Monday was Bank of America, which reported that increased bad debt due to the housing slump pushed profits down 41 percent. However, it still surpassed expectations due to a solid performance in its business not tied to real estate. The stock rose $1.07, or 3.9 percent, to $28.56. But another Dow component weighing in after the closing bell could rattle investor sentiment. American Express Co.'s second-quarter profit tumbled 38 percent -- results that came in well short of expectations -- as consumer spending slowed and credit indicators deteriorated beyond the company's expectations. The stock fell $1.29, or 3.1 percent, to $40.90 on the day and declined more than 10 percent in after-hours electronic trading. Investors were somewhat optimistic during Monday's session that mergers and acquisitions, which have been sluggish since the credit crisis began last year, might be reviving. Swiss drug maker Roche Holding announced plans to acquire the stake in Genentech Inc. it doesn't already own for $43.7 billion, making it the seventh-largest pharmaceuticals company in the U.S. Shares of Genentech were among the best performers during the session, rising $12.06, or 14.7 percent, to $93.88. Yahoo Inc. fell 78 cents, or 3.5 percent, to $21.67 after the Internet portal staved off an attempt by activist shareholder Carl Icahn to take control and sell it. Icahn, who has argued in favor of selling Yahoo to Microsoft Corp., will become a Yahoo director along with two of his nominees.
In economic news, Treasury Secretary Henry Paulson sought to reassure the public Sunday that the banking system is sound, while also preparing people for more troubled times ahead. "I think it's going to be months that we're working our way through this period -- clearly months," he said. And that was confirmed by more economic data Monday. The Conference Board said the economy contracted in June as factories cut workers' hours and stocks tumbled. The research group's index of leading economic indicators, a gauge of future economic activity, fell 0.1 percent, in line with estimates by Wall Street economists surveyed by Thomson Financial/IFR. It also revised its May figure to show a decline instead of slight growth. The Russell 2000 index of smaller companies rose 4.55, or 0.66 percent, to 697.63. Consolidated volume on the New York Stock Exchange came to 4.50 billion shares, compared with 5.49 billion shares traded Friday. Overseas, markets in Japan were closed for a holiday. Britain's FTSE 100 rose 0.52 percent, Germany's DAX index added 0.66 percent, and France's CAC-40 rose 0.65 percent.
Top Stories
Ceragon Networks Discusses Increased Q2
Revenues and Raises FY08 Guidance
Shares of Ceragon Networks Ltd. (CRNT) were higher on Monday after the Company reported results for the second quarter which ended June 30, 2008. Revenues for the second quarter of 2008 were $55.2 million, up 47.9% from $37.3 million for the second quarter of 2007 and 17% from $47.2 million in the first quarter of 2008. Non-GAAP net income was $0.13 per diluted share, compared to net income of $0.12 per diluted share for the same period in 2007. Cash and cash investments at the end of the quarter were $108 million. Mr. Ira Palti, President and CEO of Ceragon, explained in a conference call today, "We flew past the top-end of our target range in Q2, reaching al all-time record of $55 million. Bookings remained very strong. We continue to benefit from the growing worldwide demand for high-capacity technology, and we are seeing a global migration earlier than expected." "North America continues to be the only weak spot. We believe that this will continue to be weak for the balance of 2008. In 2009, we expect improvements from the growth in data usage from the iPhone launch and similar devices. Furthermore, once the merger of Sprint and Clearwire receive regulatory clearances, this could provide a boost to demand next year." Mr. Palti added, "With strong demand on a global basis, execution remains the critical success factor. We continue to emphasize technological innovation, as well as product cost production with stringent expense control." The CFO of Ceragon, Mr. Tali Idan, commented, "The Asia-Pacific region continued to grow rapidly, accounting for 57% of total revenue for the quarter. India accounted for 22% of revenue and Latin America increased to 15%. North America accounted for the remaining 6%. We had two 10% customers, with one accounting for almost 37% of total revenue." "Our gross margin in Q2 was 34%. Our operating margin was 7.8%, reflecting the lower gross margin. We expect our gross margin to return to the 35%-36% range in Q4 and beyond." Mr. Idan added, "If the dollar remains at current levels, it will have a negative impact of $600,000 in each of Q3 and Q4. We are not hedged for this impact, but we are looking for ways to mitigate the impact. If we see no improvement in the dollar, it will be quite challenging to reach our goal of 10% operating margin by the end of the year." He concluded, "We continue to have a backlog that is more than one quarter ahead. We expect Q3 revenues to be in the range of $56 million-$60 million. For FY08, we are raising our revenue growth target to 35%+ over last year’s revenues."
iCAD Completes Acquisition of
CAD Sciences for $5M
iCAD, Inc. (ICAD) announced the completion of its agreement to purchase the principal assets of CAD Sciences, a privately-held medical technology company based in White Plains, NY. The purchase price was $5 million, comprised of $2 million in cash and 1,086,957 shares of iCAD common stock.
i2Telecom Executes Joint Venture and $9M Funding
Agreement w/Kuwaiti Businessman
i2Telecom International, Inc. (ITUI) announced that it has executed a Memorandum of Understanding for a strategic joint venture with Raed A.H. Rajab, a prominent businessman in Kuwait, to expand the Company’s operations into a number of international markets by the end of this year. Through established sales channels, the Investor will provide $9 million in funding for operating and marketing expenses incurred by the joint venture during the next twelve months involving the launch of i2Telecom’s award-winning MyGlobalTalk(TM) and other telecom offerings into these markets. The joint venture will establish wholly-owned subsidiaries in each country and transfer exclusive rights to the Company’s technology to that country in exchange for the Capital Commitment. The Company will consolidate the operating results of the joint venture in its financial results beginning with the third quarter. Revenue from the joint venture is not included in i2Telecom’s previously announced guidance.
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