"I have no idea why the share price is falling. Business at Tower isn't just business as usual; it's booming," Tower Semiconductor Ltd. (Nasdaq: TSEM; TASE: TSEM) CEO Russell Ellwanger told "Globes'.
"Looking at the second quarter of 2013, we expect double-digit growth, and the closer we get to the second quarter, the more sure we are of our guidance. We also expect the second half of 2013 to be stronger than the first half, so there is no reason for the fall in the share price," he added.
Tower's share price fell 7% on Nasdaq yesterday, without any announcement by the company. The share price has fallen 65% since Elwanger took up his post in 2005.
Ellwanger sees no reason for the 27% drop in Tower's share price in the past month. "Although we haven’t announced good guidance for the first quarter of the year, we explained in the conference call why this was happening. We see recovery as we move to the second quarter. All in all, our results are strong, and things look good."
"Globes": Should an investor buy Tower shares now?
Ellwanger: "I think that investors have a very good reason to buy the share. It isn't because of any of my remarks about Tower specifically, but about any company which presents growth, profit potential, a pool of big customers, and a low share prices. If that is the case, it looks like a good time to invest. That's a general maxim. I obviously cannot tell anyone whether they ought to invest in Tower or not. My objective as CEO isn't to comment on the share price, but on our business, which is stable and generating growth."
In it financial report for the full year and fourth quarter of 2012, Tower gave a revenue guidance of $110-120 million for the first quarter of 2013 - less than its fourth quarter revenue of $147.6 million. The company attributed the low guidance to its production agreement with Micron Technologies Inc. (NYSE: MU). "Based on tape out activities and specific contracts, we see further growth during the year," said Ellwanger.
Do you think you managed investors' expectations properly earlier this year?
"On the day of the conference call and shortly afterwards, the share price did not fall too much, just 3%. I think that there was a clear understanding among investors about our situation and the reason for the fall. Since then, we've only raised our guidance, and we cannot explain the fall in the share price during the past month."
Asked if anyone at Tower took responsibility for the fall in the share price, Tower CFO Oren Shirazi spoke about the alleged effect of capital notes on the share price, saying, "If you look at the share price over the past 7-8 years, you'll that it's stable. We have a capital notes problem, but I believe that the market will price this problem close to our announcement about our situation last year, and since then the share was relatively stable. We cannot explain the market trend in the share in the past two weeks."
Ellwanger said, "We reached an agreement with the banks on the matter of the capital notes, but this cannot explain the behavior in the share price in recent weeks. It's very hard to understand what's going on, especially taking into account that the company's good shape. From my perspective as CEO, we're in great shape."
Is there anything new about the Indian deal?
"There isn't really anything new since last month's conference call. We expect to make an announcement in late March. We believe that we're in a very good position, but we cannot promise an announcement that someone else will make. I cannot promise a deal that isn't closed."
Published by Globes [online], Israel business news - www.globes-online.com - on March 7, 2013
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