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Technology Stocks : GALT - Galileo Technology -- Ignore unavailable to you. Want to Upgrade?

To: Wizard who wrote (115)	6/7/1998 8:49:00 PM
From: Zvi Steinberg	Respond to of 584

Here's the latest from Globes: "Sunday , Jun 7, 1998 Sun-Thu at 18:00 (GMT+3) Stock Market News Market Not Mistaken: After Galileo's 50% Plunge, Avigdor Vilnetz Announces Deterioration in Company's Business By Ami Ginsburg After plunging 40% in ten trading days, and losing 55% since the beginning of May, Galileo's management at last had something to say. On Friday, they announced that the results for the second quarter of 1998 would be significantly lower than the results the company achieved in the first quarter. The company expects to end the second quarter with revenue of $11.3-12 million, reflecting a 20-25% decline in comparison with the $15.1 million revenue the company posted in the first quarter. Because of the sharp drop in revenue, due mainly to the market's transition to a new generation of products and a fall in the price of current products, Galileo's net profit is also expected to plummet in the second quarter. It goes without saying that, this time too, as in the cases of Teledata, EFI, Tecnomatix, and many other companies that reported a deterioration in business, the Wall Street analysts failed to see in time what was happening at Galileo. On Thursday, a day before Galileo's announcement, Merrill Lynch issued an "accumulate" recommendation for the share in the short term - admittedly not an especially enthusiastic recommendation, but a recommendation nonetheless. Anyone who waited another day after Merrill Lynch's recommendation could accumulate the shares on Friday at an 11% discount. Galileo develops and markets fast telecommunications switches based on silicon chips, mainly aimed at local Ethernet-type communications networks. The company mainly operates through OEM agreements with the major data communications companies like Cisco, HP, Delta, Bay Networks, Madge, and others. The reason for the fall in revenue in the second quarter lies in the sharp fall in demand for 10 mb Ethernet switches, and in the fall in the price of switches for the 100 mb technology. Company chairman and founder Avigdor Vilnetz said Galileo expects to launch several new 100 mb products during the summer. According to him, these products are likely to return the company to a growth track in the second half of 1998. It emerged from the conference cal the company's management conducted with US analysts that the slowdown in the Galileo's growth rate would continue throughout 1998. Though the company hopes for an improvement in the second half of the year, CFO George Harvey said it was expected that only in the fourth quarter would the company start to reproduce the revenue it saw in the first quarter. Although its share fell sharply in the last month, the company's major shareholders, particularly Vilnetz and the Nitzanim fund, managed to unload a considerable quantity of shares just before the collapse. Vilnetz managed to realise 1.2 million shares in the last six months, selling them for a total of $40 million. The Nitzanim fund, managed by Matti Karp, sold 1.4 million shares for $49 million. Vilnetz's financial future is, of course, no cause of concern, but the last share bloc he sold three weeks ago for $9 million should concern him. The tradition of the US share market shows that the a sharp fall in the price of a stock , particularly when accompanied by lively selling activity by parties at interest, is liable to bring in train a class action against the company and its management. Published by Israel's Business Arena on June 7, 1998 "