The financial shares pulled the Dow Jones down yesterday, and technology shares also didn't function very well, even though the Nasdaq index rose.
All in all, Wall Street behaved with restraint yesterday, while awaiting the words of Federal Reserve chairman Greenspan and macro-economic price announcements.
What did arouse interest in New York was the announced by the Moody's rating agency, one of the world's three leading rating companies, that it is "considering" Japan's rating. Moody's is dissatisfied with the pace of reform in Japan. The Eastern stock exchanges were not moved by the announcement, regarding it as more of a warning. New York, however, made a fuss over it.
Many claim that the announcement was made under "US pressure". US Secretary of the Treasury Lawrence H. Summers and Federal Reserve chairperson Greenspan are dissatisfied with the rate at which reforms are being applied in Japan, which, in their opinion, is critical in the global game. "So, as we always do in business," says my good friend Steven, "We smile at the Japanese and slightly twist the knife with which we stabbed them in the side. That's the only way they get the message". In the US they are really expert at things like this, but it's hard for us to believe that someone can influence such a respectable rating agency. The Japanese really do have a growth problem, which they must solve.
What happened with the Israelis? The five nifties all rose. Comverse (CMVT) jumped strongly by over 10%, and Gilat (GILTF) by 7%, the latter following a sharp drop during the two previous days. We find it hard to find a reason for the rise in Comverse. The large turnover perhaps indicates the entrance of another large institutional investor, but there can be other reasons, such as the Tradetrek website, which evaluated Comverse up in the clouds.
What happened with Gilat is quite clear. First of all, the share fell sharply, as we said. We wrote yesterday, "An opportunity is developing before our eyes". As usual, however, we didn't think that the hunters' reaction would come so soon. There were innumerable press reports yesterday of the closing of the deal with Microsoft, and that is apparently what led buyers to enter in a big way (the share climbed by much more than 7% in the course of trading).
The other nifties, Check Point (CHKP), Amdocs (DOX), and Mercury (MERQ) continued skyward, to all appearances due to the force of inertia.
Orbotech (ORBK), which is still "on the way to become nifty", got back on the upward track yesterday. The three Israeli investment companies, which became operational and discovered that holding companies have other values and vision multiples - Ampal (AIS), Elron (ELRNF), and Formula (FORTY), were split from the point of view of trade.
Ampal rose nicely by almost 10%, while Elron and Formula calmed down, following steep climbs. Elron dropped by 6.3% and Formula by 6.5%. We found an important announcement from Formula concerning its Net Quotient subsidiary. This company is moving just like a ballistic missile. This time it announced it was entering a cooperation agreement with AkamAi Technologies (AKAM), which provides global information over the Internet. The goal of the agreement is to hurry up the large site being constructed by Net Quotient for new Internet companies beginning to deal in e-commerce.
Silicom (SILCF) fell yesterday by 16.4%, after its share had more than doubled during the past month. That's the whole story about Silicom yesterday. After all, the fact is that Silicom has "only" a deal with Possio and "only" a deal with an anonymous leading US Internet provider. The financial statements for the end of 1999 weren't so great. All we said was that the words of the general manager in the financial statements should be read closely, as well as the wording of the agreements with Possio and Itran of Beersheva. What we definitely did not say was that the share should be snapped up. Almost exactly as with Gilat Satellites, the rapid fall is quickly creating a buying opportunity. You have a chance to check now, they won't close the company tomorrow.
Published by Israel's Business Arena on February 13, 2000