Portfolio Review: It Was a Sweet Old Year

by: Shlomi Cohen
This week marks the end of the Hebrew year, and as usual, at this time I look back at the shares that stood out in my portfolio, tracked by "Globes", over the past year - since mid-September, 2009.

Radware Ltd. (Nasdaq: RDWR) rose exactly 100% over the past year - but it only entered my portfolio about halfway through. It is among the only shares in the market that today is at a record - over $25 per share - a level not seen since 2005.

In my opinion, Radware's situation has never been as good as it is now, and it is proof that sometimes with the same CEO, Roy Zisapel in this case, a firm can make a giant turnaround from a low point to prosperity. With firms' operations depending clearly today on the Internet with a wide range of applications, Radware finds itself ready after many years of development, and the acquisition of Nortel Networks unit Alteaon, with a range of advanced Internet solutions, including security solutions. The company will also benefit very much from the demand that will come over the next few years from widening the network for cloud computing services, and from the growth that has already begun in the sector that today is considered the hottest in computing - virtualization solutions.

Just like for many other equipment suppliers, the explosion of video transmission over landline and cellular telephone networks open a potential giant market for Radware. For example, at the end of the year it won a big contract in this area with Pelephone Communications Ltd.

Thanks to Cisco

The Hebrew year was outstanding for EZchip Semiconductor Ltd. (Nasdaq: EZCH), which rose 85% and closed last week above $24 for the first time since 2000. In general, the one who is responsible for this wonderful year is its indirect customer, Cisco. Through Marvell Technology Group (Nasdaq: MRVL), it boosted purchases in the past year. Among the reasons was a jump in sales of its new ASR 9000 router, powered by EZchip's third generation processors, and it is just at the beginning of its lifecycle.

Cisco made EZchip's year after Juniper, which is still its largest customer, pounded its share last year, when it decided to abandon EZchip processors in favor of processors developed in-house for its next generations of routers.

Investors did not listen then to the attempts at calming by EZchip founder and CEO Eli Fruchter, who claimed that not only will it take a long time until Juniper lowers gears, but also that Cisco will boost its purchases and become a much bigger customer than Juniper. Investors fled, and the share sank to a low of $11 last summer, compared with $24 at the end of last week.

Specifically responsible for last week's jump in EZchip's share price to a multi-year high, with very high turnover, was Barclays (NYSE:BCS), the first among big banks that began to cover the company, as part of its wide coverage of Israeli technology stocks. Analyst Joseph Wolf recommends EZchip as a "Buy", with a target price of $30.

Wolf explains that the company will grow strongly in coming years, since not only will the number of its customers grow, but every existing customer who moves on to a more advanced generation of processors significantly increases sales.

Published by Globes [online], Israel business news - www.globes-online.com - on September 7, 2010; Reprinted on Seeking Alpha with permission © Copyright of Globes Publisher Itonut (1983) Ltd. 2010

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