Aaron Katsman
www.IsraelNewsletter.com

At IOI we are not in the business of making fun of analysts who actually take a stand before an earnings report and tell investors what they think, even if they are wrong. In fact we applaud the move. It’s not very helpful to upgrade or downgrade a stock after earnings when the stock has already moved one way or another. Was it helpful to know that Google (GOOG) was upgraded this past Friday morning after the company blew past earnings and was up $70 in pre-market trading. Investors want information that they can use, before a difference making event happens to a company.

Last night the Israeli  hi-tech company Zoran (ZRAN) ,which makes chips for DVD players and multimedia systems, came out with numbers and provided a much rosier outlook than analysts had predicted. Ten days ago a Jefferies and Co.analyst downgraded Zoran stock down to ‘undeperform’, and slashed his numbers for the rest of the year as well.

Zoran predicted revenue of between $130 million and $135 million in the 2nd quarter, ahead of the $127.1 million that was the consensus. The company also said that they expect that margins for DTV and mobile phones will improve for the rest of the year.

IOI recently laid out the case for Zoran. Our subscribers would have known what the catalysts are going forward. With that being said, I still want to commend the Jefferies analyst for taking a position. He may have been wrong, we all are from time to time I am told, but at least he was proactive.

Disclosure: Author’s fund has a position in ZRAN, fund has no position in any other stock mentioned as of 4/22/08.

Please see our Disclaimer HERE.

NEW! Introducing Israel Opportunity Investor, our monthly subscription-only newsletter. Stay ahead of the game and make smart decisions in Israel stocks. Go here to learn more.

Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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Stock of the Month: ZRAN

Zoran (Nasdaq: ZRAN), was January’s Stock of the Month as part of our new subscription newsletter, Israel Opportunity Investor. You can find out more about the product and the opportunities we cover at www.israelnewsletter.com

Background

Zoran develops and markets integrated circuits (ICs) that provide digital signal processing (DSP) capabilities to a variety of consumer electronic products. These products are used in DVD players, home theatre systems, and digital cameras. The company also develops products for digital video delivery via set-top box or television. The company sells through Original Equipment Manufacturers (OEM) who package them into digital and audio products sold to consumers.
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Aaron Katsman
www.IsraelNewsletter.com

Zoran (ZRAN), a developer and marketer of integrated circuit cores (ICs) and embedded software for DVDs, digital cameras, and set-top boxes, is getting nailed today on the back of an analyst downgrade. A Deutsche Bank analyst cut his price target for the company down to $20. In lowering his rating on the chip industry analyst Arnab Chanda said, “While the stocks have declined dramatically in the fourth quarter and year to date, we do believe that for the vast majority of companies, the next six months is not likely to yield positive returns.”

Well, I disagree. The stock has gotten hit. Since the end of October the shares are down 38%. Now he decides to downgrade the stock? Thanks for playing.

In one of the best named posts we have had here at IOI my colleague Zack “Let’s get Jiggy” Miller has a great analysis of all that’s right with Zoran. One potential catalyst is that in February 2009, the US will turn off analog TV broadcasts, forcing the conversion to digital TV. In order to receive the new signals, the installed base of analog TVs will need to connect to an ATSC converter box. Congress has approved a coupon program such that each qualifying household will receive two $40 coupons to defray the cost of buying a converter box. Management estimates that the number of converter boxes sold ahead of the turnoff could reach 20-25 million units. Zoran typically sees a high-single digit dollar content off of these units.

At under $15 a share this looks like an interesting long-term play.

Disclosure: Author’s fund has no position in any stock mentioned as of 1/15/08.

Please see our Disclaimer HERE.

NEW! Introducing Israel Opportunity Investor, our monthly subscription-only newsletter. Stay ahead of the game and make smart decisions in Israel stocks. Go here to learn more.

Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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