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It’s official: Teva is the greatest
Avishai Ovadya
A look at the list of blue-chip Israeli shares traded on Wall Street neatly sums up Nasdaq’s return to reality. Pure technology companies like Amdocs (NYSE: DOX), Comverse (Nasdaq: CMVT) and Check Point (Nasdaq: CHKP) have lost the top spot to Teva (Nasdaq: TEVA), apparently an old economy company.
Why “apparently”? Because the new economy/old economy division now appears silly and embarrassing. You must have noticed how the term “new economy” evaporated in the past year, after having been the buzz word of some commentators who hyped up the hollow phrase, and even assured us they saw and understood all about the invisible, non-existent new economy.
Well, all that's in the past. Unfortunately, Teva was nearly forgotten in those days, but now it’s back to its appropriate place as Israel's biggest company in terms of market value ($10 billion).
In the past couple of months there was incessant pressure on Amdocs, Comverse and Check Point’s shares, in each case for a different reason. Comverse published a profit warning that sent its share tumbling to $25, and is now having trouble going up again. The company itself is in difficulties, and apparently won’t be rid of them in the coming year. Check Point slightly missed its revenue forecast for the second quarter and lowered its expectations for the coming quarters. The market thinks things are worse, which is why the company’s share has been going down in the past few days.
The biggest fear is that Check Point may fail to meet third quarter forecasts due to the global slowdown. The share is already 70% below its peak. On the face of it, the share price reflects a convenient p/e ratio of 20-25 for the present year, but you know what forecasts are worth. The share’s dramatic plunge also bit into its founders’ wealth. It’s all on paper, but the figures are still daunting. Gil Shwed and Marius Nacht, each of whom holds 11% of Check Point, have lost over $2 billion apiece. Shwed was already worth about $3.3 billion, but now he’s worth only $970 million, and Nacht, who had $3.1 billion, is down to $920 million. Rich man’s troubles.
By the way, the only one who sold his shares was Shlomo Kramer, who then left the company. Over the past few years, Kramer sold shares for $200 million and cut his stake in Check Point to 6%.
Amdocs is also in trouble. The company hasn’t issued a profit warning, and continues to post impressive profitability, but it, too, will apparently run into trouble - although it will be after everyone else. The market reflects apprehension over this worrisome prospect, and despite the company’s quarterly results, the share price has come under pressure.
Just imagine what will happen should Check Point and Amdocs issue a profit warning in the next six months. Their shares will continue to slide, only serving to re-emphasize Teva’s superiority as Israel's greatest company.
Published by Israel's Business Arena on 22 August, 2001 |
