What’s going on at Radware Ltd. (Nasdaq: RDWR; TASE: RDWR)? The share has fallen to a low under $6 that seems to me a level it hasn’t seen since it went public in September 1999. As may be remembered, in the summer of 2007 Radware founder Yehuda Zisapel, who served as chairman, named director Chris McCleary as executive chairman of the board, apparently with the intention that it would be easier for McCleary to supervise the moves of Yehuda’s son, co-founder and CEO Roy Zisapel.
By the last board of directors meeting, on November 30, McCleary resigned and the chairman title was passed temporarily to director Orna Berry. On December 2, just two days after the shareholders’ meeting, director Hebert Anderson resigned for “personal reasons”, according to a company announcement.
For many years already, Radware has tried - unsuccessfully - to get back to itself through reorganizations, primarily in the US market, through strengthening the board of directors or through launches of new products. Today, in the course of the global economic crisis, with the expectation for general falls in investment and with customers’ trends to buy from giant firms such as Cisco (Nasdaq: CSCO) it will be that much harder.
The company’s cash position, including cash, deposits, and marketable securities, was $137 million at the end of the third quarter, but the market is not impressed and assumes that the cash burn will not stop soon, so its market value is less than its cash level, at $113 million.
Maintenance works in recession
On Thursday, after the close of trading, Oracle (Nasdaq: ORCL) reported results for its fiscal second quarter, which ended November 30, and in these times of deep recession, the fact that there wasn’t a negative surprise led its shares to a 7% gain on Friday. At Oracle, the operating profit was extraordinary, at 46%, even though at some much smaller companies, such as Checkpoint, the figures are much higher.
Oracle reported revenue of $5.7 billion in its quarter ended November, a 6% increase over the corresponding quarter of the previous year, while the dollar’s strengthening cut 7% from its revenue. In any case, the miss on revenue, compared with market expectations, was minimal. Its earnings per share was exactly in line with expectations, at $0.34 per share, as a result of significant improvement in operating profit, which contributed much more than the negative influence of the dollar’s strength during the quarter. The company’s guidance for the next quarter was a bit below market expectations, but the figures were a result of the strong dollar, so they didn’t disappoint.
Goldman Sachs software analyst Sarah Friar rates Oracle a “Buy”, with a price target of $21. She sees it as a defensive holding during a time of recession, due to the company’s size, its operating profit, and high revenue stream from maintenance, which flows from a giant customer base of 320,000 companies. According to Friar, at this time of recession, customers prefer to concentrate their purchases from giant companies, such as Oracle, and not from niche companies, as wonderful as they may be. Its acquisition strategy proved itself primarily in the integration stages, and it has a strong balance sheet, with $11 billion in the pot.
Published by Globes [online], Israel business news - www.globes-online.com - on December 23, 2008
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