Shares in Radvision Ltd. (Nasdaq: RVSN; TASE: RVSN) tumbled 36% to $5.71 on news that Cisco will offer $3 billion to buy Radvision rival Tandberg ASA.
Investment bank Oscar Gruss downgraded its recommendation on Radvision following Cisco's announcement. Analysts Jonathan Kreizman and Ziv Tal cut their rating to Reduce from Hold, and lowered their price target to $6 from $8 per share.
The analysts are concerned that Radvision relied heavily on Cisco, which accounted for effectively half of Radvision’s network solutions revenue. They do note that since it takes a while to integrate acquired technologies, the impact won't be felt right away.
Kreizman and Tal explain, "Currently, Radvision plays a significant role in enabling the essential interoperability between Cisco’s Video Conferencing portfolio and the “outside world”."
Radvision's technology connects Cisco's solutions with those primarily developed by Tandberg and Polycom. Now that Tandberg is part of Cisco, Radvision should see a "significantly diminished" role.
The analysts view Radvision's other opportunities, for vendors such as Lifesize, IBM, and others as more limited.
Published by Globes [online], Israel business news - www.globes-online.com - on October 1, 2009
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