Last week's earthquake continues to send out after-shocks. As we've already pointed out, the reason is that the price of technology shares is still high.
This situation will continue as long as investors continue to oscillate between economic dreams and economic reality. We don't see NASDAQ falling to real share price levels, because if this happens, things will really collapse. At the same time, we definitely forecast fluctuations of 3,000-4,6000 in the short term. As we've already said, the reason is that, on the one hand, the price of most leading technology shares is still up in the air, and they will stay there even if NASDAQ falls to 3,600 and below. On the other hand, nothing has changed about the big technological dream, apart from the fact that it is now closer to realization than in the past.
Here's an example, involving Israeli shares, to illustrate that the dream has not been just a dream but a semi-coma. Sensar's (SCII) share yesterday fell by another 22.6%, and it is miles away from the records it posted in the past. And what have we been seeing on message boards in recent days? "No Revenues, No Revenues". Why? Were there any revenues a month ago? And how about three months ago, when the company rose by less than $1 to $75? Did it make any profits then?
When the company announced it would integrate Net2Wireless a few days ago, the share surged sky-high. But neither Sensar nor Net2Wireless made any profits. This can only mean that investors are sobering up. At the same time, it doesn't spell the end of the dream, because if the dream had come to an end, Sensar would have dropped to $5, which would also take a bit of dreaming.
Teva (TEVA) rose 5% yesterday. This was partly due to the general upward trend of drug companies, and, in our view, also to Biogen's fall. Wall Street analysts consider Biogen to be Teva's arch rival. Biogen's financial reports, published yesterday, were disappointing, because its p/e ratio was $0.02 lower than expected. An even bigger source of disappointment were the weak sales of Biogen's anti-sclerosis drug, which compete with Teva's Copaxone. Biogen now has one significant anti-psoriasis drug in the pipeline. The drug is currently undergoing phase 3 clinical trials and the company says it will be released on the market in the second half of 2002.
The other Israeli Nifties - Comverse, Amdocs, Check Point and Mercury - fell with the market.
Partner (PTNR) and Orckit (ORCT) plummeted yesterday - the first by more than 17% and the second by slightly over 4%. We lumped these two together not because there is any connection or similarity between them, but because we've learnt that the fund managed by Michael Levy of Deutsche Bank has considerable holdings in both.
Nexus (NXUS) fell 12.4% yesterday, right after it published an excellent announcement on signing a third contract in Venezuela. Like many other shares, Nexus has "woken up" from the big dream into which it was tempted in March. This company is worth a look - not because Soros has put his money into it, but perhaps despite this fact.
Published by Israel's Business Arena on 11 April, 2000