Check Point going cheap
The knee-jerk reaction to Check Point's guidance adjustment is an opportunity for some. ECI meanwhile is getting new leadership - and new ownership?
Shlomo Greenberg
For once, surprisingly enough, it wasn't the analysts but the investment managers and the traders who shook Check Point (Nasdaq: CHKP) up and put it through the wringer, and in the end presented us with an exceptional buying opportunity for one of the most interesting technology stocks on Wall Street.
The truth is that all the updated research reports from the analysts released in the past week, since the company revised its guidance for the third quarter and for the year, are positive, and recommend exploiting the share's weakness to buy it. Nevertheless, the blame for the sharp falls certainly rests with the analysts , who accustomed the portfolio managers, and certainly the day traders, to respond savagely to the slightest deviation from their consensus estimates
The result of the whole fiasco is that once more, a buy opportunity has been given to some investors who don't have Check Point in their portfolios. It's a phenomenon, and this is the reason why I have been arguing for three years now that you shouldn't chase after any stock, not even Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA ; TASE: TEVA) or M-Systems Flash Disk Pioneers (Nasdaq: FLSH).
ECI Telecom (Nasdaq: ECIL) continues to pick up contracts, and I have no doubt that it's on the right road to full recovery. The man who did it, company veteran Doron Inbar, is leaving, to be replaced by ECI's new COO Rafi Maor. Maor, who led Indigo until HP bought it, and who before that had a spell at Israel Aircraft Industries, is replacing one of the most talented and surprising managers in Israel's technology industry. Inbar, a finance person by training, is responsible for pulling ECI out of the mire in which it was about to sink at the end of the last century.
To tell the truth, I was one of those who thought the choice of Inbar as president of ECI was mistaken, but he has proved to be a talented manager, and for that the company owes him a debt of gratitude and recognition.
Why is he leaving now, when the company is in such an improved position and looks as though it is on the brink of a great breakthrough? Let's hope that Maor will know how to carry on what Inbar started. You have to understand that ECI has a bank of know-how and experience in telecommunications infrastructures that few other companies in the world have. ECI also has a powerful marketing network and connections the like of which very few companies possess.
I now expect that that one of the big infrastructure companies, preferably Israeli but a foreign one would also do, will offer to buy ECI. The reason is that the company's current owners, Koor Industries (NYSE: KOR ; TASE: KOR) and the Dovrat group, each for its own reasons, would, in my opinion, prefer to sell, at the right price. In New York, the word is that the right price has already been offered. We'll live and learn.
Published by Globes [online], Israel business news - www.globes.co.il - on October 11, 2005
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