Israel Trade Newsletter
June 2006
Dear friends and colleagues,
The last month has been very dynamic in Israel, both in the political and the business arenas.
A new government was sworn in with Mr. Ehud Olmert serving as Prime Minister. Being the previous Minister of Industry, Trade and Labor and Minister of Finance, Prime Minister Olmert brings with him a deep understanding of the Israeli and global economy.
In the business arena, the main event was the investment made by Warren Buffet, the world’s second richest men and a leading investor of 80% of Israeli metal tools company Iscar for $4 billion in cash. This has been the first major acquisition of Buffet outside of the United States. The deal is perceived as a vote of confidence not only in the company and its management, but also in the Israeli economy in general.
This has not been the only acquisition of an Israeli company by foreign investors and companies. You will be able to read in this issue about the Iscar - Buffet deal, as well as several other business deals and acquisitions that took place during this period.
I have just returned from a visit to Israel, accompanying a delegation from Taiwan headed by Minister of State, Dr. Lin Ferng-Ching. The group, which included the president of the Development Center for biotechnology, representatives from ITRI – the Industrial Technology Research Institute, the Science and Technology Advisory Group of the Executive Yuan and a local VC visited the Biomed Israel 2006 Conference and Exhibition and met with many innovative Israeli companies, organizations, VCs and government agencies in the areas of life science, communications and IT in order to learn about the Israeli technologies and industry and to discuss possibilities for cooperation between the Israeli and the Taiwanese industries. I believe that as a result of this visit we shall see in the future increased cooperation in the life science, communications and IT sectors.
I hope that this issue will encourage you to look more closely at Israel and the business opportunities you may find there. Please feel free to contact me or the staff of the economic department for any questions, information or assistance that you may need. You are welcome to visit our Web site: www.israeltrade.gov.il/taiwan for additional information and updates.
Sincerely yours,
Hovav Ref
Director of Economic Affairs
Content
1. Israel – Taiwan Trade News
2. Investments
3. Israel’s Economy
4. Industry Information
5. New Products and Developments
Israel – Taiwan Trade News
Inventec Appliances to Integrate Mobile Digital TV based on Receiver ICs from Siano Mobile Silicon
Leading Taiwanese Handheld Device Maker Plans Multiple Products using Siano's SMS1000 MDTV Receiver
TAIPEI, Taiwan, May 16, 2006: Inventec Appliances Corporation (IAC), a global leader in smart handheld devices and Internet appliance solutions, specializing in multimedia, broadband and wireless technology convergence, today announced it has formed strategic collaboration with Siano Mobile Silicon, a fabless manufacturer of integrated semiconductor receivers for mobile digital television (MDTV). The collaboration is targeting the integration of Siano's semiconductor MDTV receivers into multiple products, such as cell phones and other smart handheld devices.
Siano Mobile Silicon, headquartered in Israel, designs and markets semiconductor solutions for the emerging MDTV market. Its first product, the SMS1000, is now in mass production stage, and has been designed into a number of hand-held devices that will be launched to market in H2/2006 and H1/2007.
"IAC views MDTV as a strategic technology and market, and we aim at integrating it into many of our future products, addressing different regions and different MDTV standards," said Michael Chen, senior vice president of IAC. "After careful analysis of the MDTV IC supplier landscape, we have selected Siano as our strategic partner, due to their superior product offering, and the great synergy between the companies," added Chen.
"The exciting collaboration with IAC opens new applications and new opportunities for Siano," said Alon Ironi, CEO, Siano. "Through the wide range of IAC's hand-held products, Siano will fulfill its motto of 'enabling TV Everywhere.'" "Being selected by a leading, experienced ODM and OBM like IAC is a testimony of the advantages of Siano's SMS1000 in the highly competitive market of MDTV," added Ironi.
About IAC
Inventec Appliances Corporation (IAC) is a global leader in smart handheld devices and Internet appliance solutions, specializing in multimedia, broadband and wireless technology convergence. With integrated engineering design and manufacturing capabilities, IAC is committed to provide world-renowned ODM customers innovative products and solutions to address the latest high-potential market trend - connected anytime and anywhere. Other than ODM business, IAC also markets its own brand OKWAP handsets in the Greater China market. Headquartered in Wugu Industrial Park, Taiwan, IAC is traded on the Taiwan Stock Exchange Market under the ticker symbol 3367.TW.
Source: Company Press Release
Investments
Foreign investment totaled $11b in Q1, including Teva deal
Foreign direct investment exceeded $1.5 billion in the first quarter of 2006, and investment in securities exceeded $8.8 billion.
Foreign investment in Israel exceeded $11 billion in the first quarter of 2006, including the Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) deal. Excluding this deal, foreign investment is expected to reach an unprecedented $20 billion in 2006, assuming that the current investment rate continues.
Foreign direct investment in companies, high-tech and income-producing real estate exceeded $1.5 billion in the first quarter, and investment in securities exceeded $8.8 billion.
Since the end of the recession and initfada in 2003, foreign investment in Israel has reached an accumulated $35 billion, an all-time high, amounting to 30% of annual GDP. Foreign direct investment in enterprises, companies and high-tech has totaled $13.3 billion in this period, and investment in securities has totaled $21.1 billion.
Source: Globes [online], Israel business news, April 23, 2006
Inward investment totaled $1.72b in March-April
Foreign direct investment totaled $985 million in March-April 2006.
Warren Buffett is not alone. Even before the Berkshire Hathaway Inc. (NYSE:BRK.A; BRK.B)-Iscar Ltd. deal, foreign investment has been flooding into Israel. Total direct foreign investment and investment in Israeli securities totaled $1.72 billion in March-April 2006, the Bank of Israel reports. March-April can be considered as a single time unit because of the Passover holiday.
Foreign direct investment in real estate, industry and high-tech totaled $985 million in March-April, of which $461 million was invested in April. Foreign investment in Israeli securities totaled $737 million in March-April, including $227 million in Tel Aviv Stock Exchange (TASE) listed stocks. Foreign investment in the TASE in April was in both directions.
Foreign investors sold net $1.47 billion in foreign currency in April via short-term financial instruments to buy shekel-denominated assets.
Source: Globes [online], Israel business news, May 9, 2006
Warren Buffett to acquire Israeli firm for $4 billion
In what is perceived to be a vote of confidence in the Israeli economy by one of the world's wealthiest entrepeneurs, billionaire investor Warren Buffett is acquiring 80 percent in Iscar Metalworking Companies, a property of the Wertheimer family, for $4 billion in cash. The move represents Buffett's first major acquisition of a company outside of the United States.
The deal, which illustrates Iscar's net worth to be near $5 billion, puts Stef and Eitan Wertheimer at the top of the list of Israel's richest families.
Eitan Wertheimer told Israeli reporters in Omaha, Nebraska, where the deal was signed, that he updated Prime Minister Ehud Olmert and Finance Minister Avraham Hirchson on the progress of negotiations that lasted several months.
"This deal is a certificate of honor for the Israeli economy," Eitan Wertheimer said. "Other big-time investors will come in the wake of Buffet."
Iscar is a private company which manufactures advanced knives and cutting tools and is internationally renowned for its line of milling and turning products. The company's factories are situated in the Tefen industrial zone in the Galilee which was founded by Stef Wertheimer.
Iscar also owns and operates factories in countries around the world.
Buffett, who is chairman and chief executive officer of the investment firm Berkshire Hathaway, believes in the quality of Iscar's management team, all of whose members are expected to remain in their posts, including President and Chief Executive Officer Jacob Harpaz, a press release said.
Eitan Wertheimer, the son of the company's founder Stef Wertheimer and who is credited with leading it to new heights of success, will also remain with Iscar in his capacity as chairman of the board.
Buffett's fortune ranks him as the second wealthiest person in the world behind Microsoft founder Bill Gates. He is also considered to be the most talented investor on the globe.
Buffett and Eitan Wertheimer will make a joint appearance Saturday before an audience of close to 25,000 who have gathered for Buffett's annual investors conference in his hometown of Omaha, Nebraska.
The conference - which brings together tens of thousands of would-be investors, including Berkshire Hathaway stockholders - is thought to be one of the year's most anticipated business events of the year.
Patrons flock for a rare opportunity to hear Buffett, who is not wont to appear in public, in the hope to receive sound investment advice from the reclusive billionaire.
Hotels in Omaha are fully booked for this weekend as visitors, who have given the conference the moniker "capitalism's Woodstock," reserved rooms many weeks in advance.
In his statements, Buffett is expected to express his confidence in the Israeli economy.
Investors all over the world closely follow the progress of companies in which Buffett invests as well as his statements and opinions regarding long-term global economic projections and analysis.
Nicknamed "the Oracle from Omaha," has for years stuck to his prediction that the dollar would weaken. Buffett even made a significant investment in the steel market - silver, that is.
In 1998, Buffett purchased 129.7 million ounces of silver at six dollars an ounce. Two weeks ago, the price of silver reached a 23-year high of 14.68 dollars per ounce.
Although Berkshire Hathaway stocks have significantly risen since Buffett took the reins of the company in 1965, it has lagged behind the S&P 500 since February 2004.
Conversely, Iscar's investments are far less known even in Israel given that the company is privately owned and does not sell its shares on any stock exchange. In addition, the Wertheimer family is tight-lipped on all matters relating to their finances.
Iscar manufactures tools for slicing metal which are used by companies which employ computerized lathing methods. Iscar is thought to be a world leader in the field.
Israeli analysts believe Iscar earns over $500 million per year. The company's sales reached over $1 billion in 2005 and analysts anticipate figures for the coming year showing an increase.
In recent years, speculation has persisted that Iscar would begin selling its shares on the New York Stock Exchange. That scenario, however, has yet to unfold.
What began 30 years ago as a modest welding shop in Nahariya headed by Stef Wertheimer has become a profitable venture for many years running. In the early 1990s, IDB Holdings purchased a 25 percent minority stake in the company. As a result, the company's financial results have since been revealed.
Although the numbers demonstrated Iscar's extraordinary profitability, the Wertheimer family aimed to reacquire the 25 percent share sold to IDB so that its earnings could remain out of public view. IDB, which was then owned by the Recanati family and under the management of Dov Tadmor, refused, triggering a bitter feud between the two giants.
In an extraordinarily shrewd financial move, Eitan Wertheimer began buying up large amounts of IDB stock as a means of putting pressure on IDB's holding company. The move paid off, and IDB sold back the 25 percent to the Wertheimers.
To add insult to injury, the state subsequently sued Tadmor and IDB executives for concealing information from the public in presenting Iscar reports as "IDB reports." Even though Tadmor was convicted and sentenced to community service, his conviction was overturned by an appeals court.
As a result of the buyback, the Wertheimer family regained 100 percent controlling interest in Iscar. Over the course of the last decade, Iscar has continued its rapid growth thanks to the expansion of the global economy as well as the demand for sophisticated lathing machinery and, by extension, cutting tools of the kind Iscar manufactures.
Iscar's high profitability and the Wertheimer's 100 percent stake have made Stef and his son Eitan one of the richest families in Israel. Eitan Wertheimer is near the top of TheMarker's 500 richest Israelis list with a fortune estimated at billions of dollars.
The sale of the company to Buffett is expected to catapult the Wertheimer's to the top of the list.
"We are delighted to partner with the Wertheimer family and IMC's current management, led by Eitan Wertheimer and Jacob Harpaz," Buffett said in a press release issued to the media early Saturday. "As a truly international business, IMC is a top performer in its industry, with exposure to European, Asian and Latin American markets, as well as significant opportunities for growth as it continues to penetrate the North American market."
"My partner, Charlie Munger, and I have been impressed by IMC's simple and profitable business model. With this acquisition, we have the benefit of investing in a stable business with very significant growth prospects."
"As a member of the Berkshire family we'll have the benefit of a strong platform that's committed to continuing our historical success," said Eitan Wertheimer. "This transaction is not only significant for our company, our customers and our employees, but also for our industry, and for the State of Israel."
Source: Haaretz.com, May 6, 2006
The 'best company' he bought
The acquisition of Iscar Metalworking by the biggest private investor in the world, Warren Buffett, is a declaration of confidence in the Israeli economy that is worth billions, more than any declaration by any minister of finance and more than any plan to boost growth and employment.
This isn't just talk, it is real money. And when Buffett puts down billions in cash on the barrel, he plans to make money. He plans to see Iscar grow faster and become even more profitable than it is today. Businesspeople the world over hear the news and understand it is worth investing here, Israel is not just Qassam rockets and artillery in the Gaza Strip, but also magnificent industry and a growing economy.
When Buffett told Eitan Wertheimer that Iscar was "the best company I've bought," he made it easier for any board of directors anywhere in the world to invest here because "if Buffett invested, we can too."
Buffett is a god of investment and money in the U.S. Twenty thousand of his shareholders met yesterday in Nebraska to hear the guru explain his strategy, and why he bought Iscar in a tiny Mideast country that he's never visited. Investors will ask him tough questions, he will answer, and every word out of his mouth will be printed in the major newspapers across the U.S.
There is no reason to fear the closure of Iscar factories in Israel. Buffett knows he bought the Israeli mind, Israeli management and Israeli knowhow. That is what is special about Iscar: people educated for excellence. Without them, the factory isn't worth much. So there is no reason to fear layoffs. They won't happen - in contrast, there will be growth and expansion.
Iscar's problem was strategy. After a successful shopping spree in recent years, buying up competitors from Japan to Poland, the company hit its glass ceiling. There are many companies that are not willing to do business with Israel, arguing "risk" or various ideological reasons. Eitan Wertheimer encountered increasing barriers to expansion, and he wanted to be number one in the world - not number two.
So Wertheimer looked for a strategic investor, a serious American, with whom no country in the world would hesitate to do business - and he found Warren Buffett, who he has known for just half a year.
The Galilee is also going to profit from the move, because the Galilee is the apple of Stef Wertheimer's eye, and now the family has another $3 billion (after tax) to invest.
Stef disdains anyone who deals in "air" like the stock exchange, money, and politics. Only industry is important, only in industry is there creativity, only in industry is there art. On Saturday, Stef Wertheimer told Haaretz his family would continue to invest in the Galilee, which will develop into the most important center in Israel for advanced industry. "The Galilee will put Miami (Tel Aviv) and the Holy City (Jerusalem) to shame".
The stunning price paid for Iscar indicates it is possible to make big money in basic industry too, not just electronics. Stef Wertheimer started doing that in 1948 when he established a small factory to manufacture aircraft engine blades. Later moving into the manufacture of metal-cutting tools for the automobile and aviation industries. His son Eitan made the company a multinational based on advanced robotics, with tremendous productivity per employee. "Buffett is buying the education our people got at the factory over many long years," Stef Wertheimer told Haaretz proudly on Saturday.
And don't forget. The family still holds a 20-percent stake in Iscar worth another $1 billion. Tomorrow that will be worth more.
Source: Haaretz.com, May 7, 2006
Berkshire Hathaway Inc. - Iscar Ltd. Joint News Release; Berkshire Hathaway to Acquire Iscar Metalworking Companies
OMAHA, Neb. & TEFEN, Israel--(BUSINESS WIRE)--May 5, 2006--Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) and Iscar, Ltd. today announced that Berkshire Hathaway has agreed to acquire 80% of the Iscar Metalworking Companies (IMC) in a transaction that values IMC at US$5 billion.
The Iscar Metalworking Companies is a privately held group, with operations worldwide, and is an industry leader in the metal cutting tools business through its Iscar, TaeguTec, Ingersoll and other IMC group companies. Upon completion of the transaction, Berkshire will own 80% of the business and the Wertheimer family, IMC's current shareholders, will own the remaining 20%. The transaction remains subject to customary closing conditions, including regulatory approvals.
After becoming a part of the Berkshire family of businesses, IMC will continue to be managed by its current management team, including Chairman Eitan Wertheimer and President and Chief Executive Officer Jacob Harpaz, as well as the rest of its current worldwide management team. IMC will remain headquartered in Tefen, Israel, and its worldwide business operations will continue as usual.
"We are delighted to partner with the Wertheimer family and IMC's current management, led by Eitan Wertheimer and Jacob Harpaz," said Warren Buffett, Berkshire Hathaway Chairman and Chief Executive Officer. "As a truly international business, IMC is a top performer in its industry, with exposure to European, Asian and Latin American markets, as well as significant opportunities for growth as it continues to penetrate the North American market. My partner, Charlie Munger, and I have been impressed by IMC's simple and profitable business model. With this acquisition, we have the benefit of investing in a stable business with very significant growth prospects."
"As a member of the Berkshire family we'll have the benefit of a strong platform that's committed to continuing our historical success," said Eitan Wertheimer. "This transaction is not only significant for our company, our customers and our employees, but also for our industry, and for the State of Israel. We are gratified by Berkshire's investment in the group, and proud of what we have achieved since Iscar's founding more than 50 years ago by my father Stef Wertheimer, who will continue to lend his vision to the group. We are looking forward to a long and profitable partnership with Berkshire Hathaway."
"This acquisition ties the knot between Berkshire Hathaway, one of America's outstanding businesses, and IMC, an extraordinary industrial company with a truly global reach, and a presence in the world's most dynamic regions and economies," said Jacob Harpaz. "We believe that our partnership with Berkshire will further strengthen our position in the North American market and worldwide and allow us to continue the phenomenal growth that we have experienced over the past 50 years."
About Berkshire Hathaway
Berkshire Hathaway and its subsidiaries engage in diverse business activities, among which the most important is the property and casualty insurance business conducted on both a direct and reinsurance basis. Common stock of the company is listed on the New York Stock Exchange, trading symbols BRK.A and BRK.B.
About the Iscar Metalworking Companies (IMC)
The Iscar Metalworking Companies provide a comprehensive range of tools for the full scope of metalworking applications. The group is dedicated to a philosophy of continuous improvement and innovation in all facets of its operations, including manufacturing, product development, distribution, sales, and administrative functions. IMC's products are manufactured in a global network of world-class, technologically advanced manufacturing campuses, the largest located in Tefen, Israel, and including facilities in the United States; Korea; Brazil; China; Germany; India; Italy and Japan; and sold through subsidiary offices and agents located in 61 major industrial countries worldwide.
In connection with this transaction, Wachtell, Lipton, Rosen & Katz provided legal advice to the Iscar Metalworking Companies, and Munger, Tolles & Olson LLP provided legal advice to Berkshire Hathaway.
Source: Company Press Release
VeriFone acquires Lipman
The deal is valued at $793 million. VeriFone will continue to trade on the NYSE and will be dual listed on the TASE.
VeriFone Holdings Inc. (NYSE: PAY) and Lipman Electronics Engineering (Nasdaq: LPMA; TASE: LPMA) today announced that they have entered into a definitive agreement for VeriFone to acquire Lipman
Rosh Haayin-based Lipman is a provider of electronic payment systems.
Following the acquisition, VeriFone stated that it will become the largest global provider of electronic payment solutions and services, capitalizing on accelerating growth in the emerging markets and demand for IP-based and wireless payment systems.
Lipman shareholders will receive for each Lipman share 0.5 shares of VeriFone common stock and $14.304 in cash, adjusted for a special dividend. The amount of the special dividend has not been finally determined but will likely exceed $23 million.
Alternatively, Lipman shareholders may elect to receive either $29.07 in cash, or 0.9844 shares of VeriFone stock for each Lipman share, each adjusted for the special dividend. The cash and stock elections are subject to proration such that VeriFone will issue in the aggregate approximately 13.3 million shares of VeriFone stock and pay approximately $382 million in cash, adjusted for the special dividend.
The acquisition is valued at $793 million based on VeriFone's share price at the close of trading on April 7th, 2006.
Following completion of the acquisition, VeriFone will continue to trade on the New York Stock Exchange and will be dual listed on the Tel Aviv Stock Exchange.
VeriFone chairman and CEO Douglas G. Bergeron said, "The acquisition provides exciting opportunities for VeriFone. The two companies are the fastest growing and most profitable providers of point of sale electronic payment technologies. Geographically, the businesses are complementary, and will be the leader in North America and the emerging markets, and number one or number two in most other key markets world-wide. Through this acquisition we will extend our technology leadership, particularly in the rapidly growing wireless and IP segments. Most importantly, we will be able to bring new technologies to market more quickly, offer a broader set of solutions and increased level of service and support to our customers worldwide."
Lipman president and CEO Isaac Angel said, "The ability to leverage VeriFone's worldwide sales and marketing channels will increase the rate at which we can penetrate the emerging markets that have tremendous growth potential."
Lipman's revenue for 2005 was $235.4 million, an increase of 30.4% over the comparable period of 2004, and net profit for the year was $20 million.
VeriFone's 2005 revenues were $485.4 million, an increase of 24% over the comparable period of 2004, adjusted net profit was $49.7 million.
Lehman Brothers acted as financial advisor to VeriFone on the acquisition. Merrill Lynch acted as financial advisor to Lipman.
Source: Globes [online], Israel business news, April 10, 2006
Swedish e-label co Pricer acquires Israeli Eldat for $40m
The merger forms the world’s principal provider of advanced electronic shelf label (ESL) systems for retailers.
Swedish electronic display and information supplier Pricer AB is acquiring privately held Israeli based Eldat Communication Ltd. for $40 million (SEK 300 million).
Pricer will acquire 100% of the shares in Eldat and in exchange issue 261.8 million Pricer shares giving the owners of Eldat close to 26% ownership of Pricer.
Established in 1994, Eldat's capabilities in the infrared communication field, are based on electronic defense systems and integrated circuit design (ASIC).
The companies stated that the merger will form the world’s principal provider of advanced electronic shelf label (ESL) systems for retailers, as Pricer’s global market share will be over 60%.
Pricer president and CEO Jan Forssjö said, “Pricer and Eldat are the only ESL providers that have been successful in large scale ESL deployments with integrated retailers in France and Japan, where ESL has found widespread market acceptance. We believe the acquisition of this leading ESL provider consolidates our efforts to offer better value, better scale and better expertise to the existing installed base and overall market.”
“Our strategy is to now create one industry standard allowing retailers to confidently build their display solutions today and for the future,” adds Jan Forssjö. “We plan on being at the center of the coming ESL explosion, and this acquisition ensures that resources are spent building strength in the Pricer/Eldat backbone.”
In Japan, Pricer and Eldat are the two principle ESL providers with the absolute majority of the market where Pricer through its partner Ishida is the largest ESL provider while Eldat with its partner Teraoka holds a very strong position.
In France, Eldat has approximately 8 million ESL’s installed while Pricer has approximately 6 million.
The joint companies will have over 33 million ESL’s installed with over 2,700 stores including many of the world’s largest retailers.
Eldat had sales of $17.2 million in 2005, gross profit of 32%, and a net profit of $200,000. Eldat employs about 45 people in offices in Tel Aviv and Paris. The companies noted that their joint pro forma sales for 2005 were SEK 454 million, and their combined workforce will be 160 employees.
The companies believe they are the only providers of bi-directional broadband ESL communication.
The Eldat solution uses infra-red technology, as Pricer, to deliver fast and accurate pricing information to the shelf edge and is the only other scalable ESL solution available, from 100 m² to 25 000 m², from 500 ESL’s to 100 000 ESL’s.
The joint companies stated that they will strive to combine their similar technologies into an advanced software and infrastructure platform to create a comprehensive backbone that will provide customers with a clear product roadmap based on a joint industry standard.
Source: Globes [online], Israel business news, April 24, 2006
US giant EMC buys Israeli start-up Kashya for $153m
Kashya develops data replication and protection software. Jerusalem Global Ventures' Shlomo Kalish: Kashya rejected offers from larger companies.
US giant EMC Corp. (NYSE: EMC) today announced the acquisition of Israeli start-up Kashya Inc. for $153 million in cash. Kashya was founded in 2001 by three entrepreneurs: CEO Michael Lewin, COO Yair Heller and CTO Ziv Kedem, and raised $25 million altogether. Kashya will be integrate into the EMC Software Group and continue operating in Israel.
Kashya means “a problem difficult to solve” in Aramaic. The company develops data replication and protection software for disaster recovery and business continuity. The company has a long line of customers and business partners, including Cisco Systems (Nasdaq: CSCO) and Unisys Corp. (NYSE:UIS). Kashya’s products specialize in restoring lost data, whether the result of human error or external damage. Based on proprietary technology, Kashya’s solutions provide a response for protecting and retrieving data at large organizations. Second-generation products offer solutions for protecting enterprise data and databases in a simple and easy-to-use manner.
Jerusalem Global Ventures (JGV) was the first fund to invest in Kashya at a very early stage, before the company formulated its initial concept. JGV founding partner Shlomo Kalish said today, “Kashya received offers from larger companies, but rejected them because its board believed in the company and thought the offers did not reflect the company’s potential.”
JGV’s NetLaunch fund, which invested $6 million in Kashya, will make $36 million when the sale is closed. NetLaunch manages $40 million. The exit will enable the fund to make a return for investors. This is a handsome achievement, in view of the fund’s troubles during the hard times after the high-tech bubble burst, and stands in contrast to other venture capital funds founded in 2000, which are still far from making a return on investment.
EMC Software Group president Dave DeWalt said, “Information protection is a chief concern for customers today. By combining Kashya’s rich portfolio of heterogeneous replication software with our industry leading virtualization and continuous data protection technologies, EMC is enhancing the market’s broadest set of capabilities for virtualizing and safeguarding the world’s information.
“Today’s acquisition expands our market and gives us key technology to extend our share of growing and strategic information infrastructure markets. Beyond the complementary nature of its products and partner ecosystem with that of EMC, Kashya represents immediate technology infusion in the areas of storage virtualization, recovery management and heterogeneous replication while bringing key technologies to EMC for future development. Additionally, Kashya’s Israel-based R&D operation forms the core of the new, innovative EMC Israel Software Development Center, creating new center of excellence for EMC software development.”
Source: Globes [online], Israel business news, May 9, 2006
IBM buys software co Unicorn Solutions
The company is registered in New York and with an R&D center in Jerusalem.
IBM (NYSE:IBM) today announced the acquisition of Unicorn Solutions Inc., a company registered in New York and with an R&D center in Jerusalem. Sources inform ''Globes'' that the price tag was $10 million.
In its press release, IBM said Unicorn’s 28 employees at its Jerusalem R&D center would join IBM R&D laboratory in Israel.
Founded by CEO Dr. Zvi Schreiber in 2001, Unicorn has raised $12 million to date. Schreiber previously founded Tradeum, which was sold to Verticalnet Inc. (Nasdaq:VERT) in 2000 for $500 million.
The acquisition of Unicorn is IBM’s second acquisition in Israel this year, following the acquisition of iPhrase, whose employees also joined the IBM Haifa Research Laboratory in Israel.
Unicorn develops software for metadata management. Metadata is information that is used to describe the characteristics of data, such as when and by whom it was created, accessed, modified, as well as how it is formatted. Companies use metadata to gain a better understanding of how they can most effectively use data in their business processes..
IBM Haifa Research Laboratory general manager Dr. Michael Rodeh said, “This step is further proof of IBM’s high appreciation for R&D conducted in Israel.”
Gartner Inc. included Unicorn in the “visionary quadrant” in its “Magic Quadrant”. “Red Herring” included the company in its 100 leading start-ups in 2005.
Unicorn’s technology will improve IBM’s information management solutions basket, and IBM will include Unicorn’s solutions in its software products. Unicorn is IBM’s 18th acquisition in Israel since 2001.
Jerusalem Global Ventures (JGV) is the only Israeli venture capital fund that invested in Unicorn. JGV founding partner Shlomo Kalish said today, “The company operates in the area of enterprise information consolidation. It was ahead of its time, so it struggled to make sales during the hard years of the high-tech crisis. We’re pleased that IBM, the global leader in enterprise solutions, will adopt Unicorn’s solutions. In addition, all the company’s employees will stay in Israel and work for IBM.”
Unicorn said it could not comment on the report.
Source: Globes [online], Israel business news,May 9, 2006
Microsoft buys Israeli co Whale for $75 million
The company’s investors include venture capital firm exSeed, investment bank Goldman Sachs, and BRM Capital.
Bill Gates is investing in Israel. Microsoft (Nasdaq: MSFT) has acquired Israeli security software company Whale Communications for $75 million. The details of the deal have not been officially disclosed and both companies have maintained absolute secrecy about the deal in recent months.
Whale was co-founded in 1998 by president Daniel Steiner and Elad Baron. BRM Capital chairman Eli Barkat serves as Whale Communications chairman.
The company provides secure Virtual Personal Network (VPN) services using SSL encryption. It has turned its focus to the communications market, and is offering enterprises solutions for secure access to knowledge systems and enterprise applications.
Whale was one of the first companies to focus on this field back in 1992. Whale was listed in international accountancy firm Deloitte Touche’s “Europe Fast 500” list of top companies in 2005. Its international sales and R&D centers are located at its headquarters in Rosh Ha’ayin, with two additional sales offices in Britain and France. Whale has had annual sales of millions of dollars in recent years.
Whale’s investors include venture capital firm exSeed Venture Capital, investment bank Goldman Sachs (NYSE: GS), Plenus Venture Lending Fund, and BRM Capital.
Microsoft’s previous acquisitions in Israel include Maximal Innovative Intelligence, which it acquired in 2001 for $20 million, and Peach Networks, which it acquired in 2000 for $72 million. Peach was merged with the Microsoft TV division, which closed in 2002. Peach was managed by Moshe Lichtman, who previously managed Microsoft’s IPTV division, and recently returned to Israel to head up the company’s expanding local R&D center.
Microsoft has also hinted that it would be making an intensive entry to the information security field and the acquisition of company with an R&D capacity like that of Whale secure Internet access may well become Microsoft’s first R&D center in a new strategic field, remote from the company’s areas of business.
Source: Globes [online], Israel business news, May 18, 2006
Israel’s Economy
Israel 12th in world’s top 26 business-friendly economies
"The Economist" noted reforms in Israel’s capital market, banking system, labor market and foreign currency regulations.
he business environment in Israel’s economy has continued to improve, with a substantial reduction in bureaucracy and regulatory procedure, said “the Economist”.
”The Economist” says that the Israeli economy is now easily accessible and more open to foreign investment than in previous years and this is set to continue for the next five years through 2010. However, there is still room for improvement, especially in regulatory procedures. “The Economist” notes the reforms in Israel’s capital market, banking system, labor market and the liberalization in foreign currency trade.
”The Economist” notes that China, by comparison, is an attractive target for foreign investment but is nevertheless unwelcoming to foreign residents who claim that China “is not an easy place to do business.” Poland too, having secured its admission to the European Union, has lost its appetite for business-friendly reforms and now languishes in 37th place.
Israel is ranked by “The Economist” at 23 on its list of business-friendly economies with a relatively high score of 7.8 points out of a possible 10 the same as Chile and higher than the scores for Malaysia, South Korea, the Czech Republic, Poland, Thailand, South Africa, Mexico, Brazil, China, Argentina, India, Russia, Pakistan and Venezuela.
Denmark has the most foreign-investor friendly economy with a score 9 points out of a possible 10. Finland is in second place on “The Economist” rankings followed by Canada, Singapore, The Netherlands, Ireland, UK, US and Hong Kong. Israel is ranked at 23 in “The Economist” comprehensive survey of 80 countries.
Source: Globes [online], Israel business news, April 10, 2006
Israel's economy grew at 6.6% in first quarter
Business product rose by an annualized 10.6%.
Prime Minister Ehud Olmert and Governor of the Bank of Israel Prof. Stanley Fischer had an excellent first quarter. The economy grew by an annualized 6.6% in the first quarter of 2006, well above forecasts and faster than the 5.2% growth in 2005 as a whole, according to a Central Bureau of Statistics report on the economy published today.
The Central Bureau of Statistics said business product rose by an annualized 10.6% in the first quarter, after rising 6.6% in 2005. Investment in fixed assets grew by an annualized 16.3%, including a 57% increase in investment in land vehicles and a 20% increase in investment in machinery and equipment.
Meanwhile, the construction industry continues to stagnate. Investment in residential construction fell 2.6%, and investment in non-residential and other construction fell 1.7%.
GDP per capita rose 5.1% in the first quarter, higher than forecast, compared with 3.3% growth in 2005 and 2.6% in 2004. Private consumption per capita rose by 8.7%, after rising moderately last year. Private consumption rose by an annualized 10.3% in the first quarter, including an annualized 14.6% increase in purchases of durable goods.
The Central Bureau of Statistics said exports of goods and services rose by an annualized 2.4% in the first quarter, after falling 9.6% in the preceding quarter. Income from tourism rose by annualized 41% in the first quarter, and industrial exports, excluding diamonds, rose by an annualized 9.2%. On the other hand, party because of exchange rate volatility, diamond exports fell by an annualized 35%, and agricultural exports fell by 36%.
Imports of goods and services fell by an annualized 2.5% in the first quarter. Civilian imports fell by an annualized 5.2%. Changes in these items meant that sources available to the economy from GDP and imports rose by an annualized 2.5%.
Since the end of the intifada in mid-2003, Israel’s economy has grown by 15%, and GDP per capita has grown by over 9%. In absolute figures, GPD reached an annualized NIS 540 billion in the first quarter, and private consumption totaled NIS 312 billion.
GDP per capita is approaching NIS 77,000, more than $17,000, and private spending per capita was NIS 44,000.
Source: Globes [online], Israel business news, May 15, 2006
Industry Information
Gartner ranks ECI among SDH technology leaders
Gartner’s Magic Quadrant is a graphical representation of a marketplace, based on Gartner’s analysis of equipment vendors’ technology vision and ability realize it.
ECI Telecom Ltd. (Nasdaq: ECIL) today announced that international technology research and information company Gartner Inc. has positioned it the “leaders quadrant” in its “Next-Generation Synchronous Digital Hierarchy (SDH) Equipment Magic Quadrant for 2006".
Gartner’s Magic Quadrant is a graphical representation of a marketplace, based on Gartner’s analysis of equipment vendors’ technology vision and ability realize it. According to Gartner, companies that are positioned in the "leaders" quadrant are performing well today, have a clear vision of market direction and are actively building competencies to sustain their leadership position in the market.
ECI EVP and general manager Optical Networking Division said, “We feel that being listed by Gartner in the leaders quadrant is a rewarding confirmation of our commitment to the next-generation SDH and optical networking market. This results from our focused R&D and marketing efforts and has been reflected in our 36% compound annual revenue growth in optical networking over the last two years. As a global leader, we are focused on providing innovative solutions that help service providers manage their networks more efficiently, leverage their investment in next-generation SDH and introduce new services that generate higher revenues."
Source: Globes [online], Israel business news, May 9, 2006
Gilat Satellite completes China project
Gilat Satellite Networks (NASDAQ: GILTD) last week announced that it had completed a giant project in China. The Israeli company installed about 1,000 SkyEdge devices - Very Small Aperture Terminals (VSATs) ? to supply phone and Internet service in remote areas of China.
The job was commissioned by China Satellite Communications Corp., known as China Satcom. Gilat did not reveal how much it made on the project.
China Satcom deployed Gilat's VSATs in Gansu province and Inner Mongolia Autonomous Region, Gilat said.
China Satcom is among six basic telecommunications operators in China. The company has 31 branches throughout the country.
Source: TheMarker, April 16, 2006
Beijing Metro selects NICE security solution
The advanced digital video monitoring solution will be deployed in time for the 2008 Olympics.
NICE Systems (Nasdaq: NICE; TASE: NICE) today announced that it has been selected by Beijing Metro to supply its next generation security solutions to help enhance the safety and security at more than 20 stations of the city's subway system. No value was disclosed.
The project is part of Beijing's massive campaign to upgrade its subway system's security network in preparation for the 2008 Olympics.
All Beijing Metro stations connected to the security system will be monitored from the station monitoring room and from the central command and control center, giving security personnel the power to identify risk, make optimal decisions, and take action that improves security.
NICE's advanced real-time distributed digital video solution will spot suspicious packages left behind on a crowded subway platform and automatically alert security personnel. The solution will also be utilized to automatically detect unauthorized entry into secured areas.
NICE provides insight from interactions solutions, based on advanced analytics of unstructured multimedia content from telephony, web, radio and video communications.
Source: Globes [online], Israel business news, April 17, 2006
Israeli water knowhow flows to China
China and Israel will work together to introduce Israeli water technology into the world's most populous nation, under a cooperation agreement reached with China's Ministry of Water Resources during last week's Water Expo in Beijing.
Mekorot Water Company Chair Booky Oren headed the Israeli delegation, which comprised 11 water technology companies. The delegation was organized by the Israel Export Institute, the Israeli embassy in Beijing and attaches of Israel's trade and science ministries.
China's Water Resources Minister, Wang Shucheng, told Oren that he has for years recognized Israel's leadership in the agricultural field and would be happy to expand cooperation in the field of water technology as well. Oren also made a cooperation agreement with the head of Beijing's water system on the local level.
An additional agreement was made with the city of Shenzen, China's electricity capital, which has 11 million residents. The city suffers from serious water problems, and its water budget under China's current five-year plan is around $9 billion. Israeli water technology will be introduced there by 2007.
Source: www.haaretz.com, May 4, 2006
Ituran subsidiary Telematics receives $2m order from China
The unnamed customer provides location-based services in Beijing using an Ituran location system deployed by Telematics Wireless.
Ituran Location and Control Ltd. (Nasdaq:ITRN); TASE:ITRN) announced today that Telematics Wireless Ltd., a fully owned subsidiary of Ituran, was awarded a $2 million order for end-user location devices as part of a master agreement with a Chinese customer.
The customer, which was not named, provides location-based services in Beijing with an Ituran location system that was deployed recently by Telematics Wireless.
Ituran provides location-based services, consisting predominantly of stolen vehicle recovery and tracking services, as well as wireless communications products used in connection with its location-based services and various other applications.
The master agreement was signed in August 2004 between Telematics Wireless and the Chinese customer, along with a specific production agreement between the parties.
This order of the end user location devices will be delivered during 2006 for operation in Beijing.
Ituran co-CEO Eyal Sheratzky said, "We believe that the Chinese market has significant potential for us, and this initial order marks a first milestone of our penetration into this phenomenal market."
Source: Globes [online], Israel business news, April 17, 2006
New Products and Developments
KFAR SABA, Israel, May 11, 2006
Announcing x4™ Technology Breakthrough, msystems™ Takes the NAND Industry to the Next Level
Ground-breaking 4-bit per cell NAND flash technology is designed to revolutionize NAND flash manufacturing economics, increase fab profitability and fuel new generations of multimedia-rich, consumer electronics devices
msystems™ (Nasdaq: FLSH), a leader in smart personal storage, today announced x4™ technology, a technological breakthrough designed to revolutionize NAND flash manufacturing economics, increase fab profitability with no changes to manufacturing processes, and fuel new generations of multimedia-rich, consumer electronics devices.
As a proprietary msystems’ technology encompassing unparalleled flash management and control algorithms, x4 technology is designed to enable utilization of 4-bit/cell NAND flash, previously considered to be a practical and physical impossibility. x4 NAND components, likely to be mass produced during 2007, are to be comprised of the first-ever 4-bit/cell NAND flash media and an indispensable x4 technology controller. Thanks to msystems’ technological breakthrough, NAND flash manufacturers are expected to realize over 30% cost savings in comparison with the most advanced 2-bit/cell multi-level cell (MLC) NAND flash wafers manufactured to date through equivalent lithography. This is accomplished by doubling bit density in comparison with such MLC NAND flash, and quadrupling it when compared with single-level cell (SLC) NAND flash. Furthermore, as msystems’ x4 technology requires no changes to manufacturing processes, it stands to increase fab profitability.
“This is a phenomenal day for NAND flash manufacturers and the consumer electronics market, as well as for msystems,” said Dov Moran, president and CEO of msystems. “x4 technology is msystems’ highest peak in a sixteen-year trail of continuous innovation and systems-level expertise as well as the culmination of five years of dedicated research and development efforts. Based on msystems’ robust flash management patent portfolio, x4 technology represents a quantum leap forward for the flash industry, underlining our ongoing commitment to making personal storage smarter. Judging by the undisputed success of 2-bit/cell MLC NAND flash technology and the significant cost savings x4 technology is designed to deliver to NAND flash manufacturers, we believe x4 NAND components are set to further push flash memory from prevalent to pervasive, ushering in new generations of affordable, multimedia-rich, personal storage for consumer electronics devices.”
With a decrease in price per gigabyte (GB) of more than 80 percent over the past three years, NAND flash storage is the memory medium of choice for a plethora of devices in the consumer electronics space. x4 NAND components are expected to target consumer electronics devices, such as digital audio (MP3) players, consumer solid state drives (SSDs), portable media players, digital video cameras, GPS devices, multimedia and music handsets, memory cards and USB flash drives.
Driven by the widespread availability of personal storage devices, the demand for NAND flash memory is expected to grow by leaps and bounds. In recent research, Gartner forecast that the NAND flash market would grow from $11.96 billion in 2005 to $24.70 billion in 2010. Decreasing prices and surging demand have pushed manufacturers to look for new ways to maximize bit density per wafer, in the hope of driving fab profitability and return on investment. msystems’ x4 technology, through its ability to transparently quadruple the density of SLC NAND flash wafers, has been developed to provide this sought-after advantage.
“The NAND flash market is experiencing phenomenal growth fueled by the digital revolution. Building new manufacturing fabs to satisfy tremendous demand requires huge investments, and such efforts may not be recognized in a fiercely competitive environment,” said Joseph Unsworth, principal research analyst, Gartner. “Technology developments that leverage existing NAND manufacturing processes can be critical in helping manufacturers achieve significant cost savings without the burden of major capital expenditures, thereby enabling higher profitability.”
A proprietary technology, x4 is well rooted in msystems’ vast flash management expertise, such as its renowned TrueFFS® technology, its system-solution approach and robust intellectual property portfolio. Several x4 technology partnerships are currently being evaluated by msystems, and are likely to lead to mass production of x4 NAND components during 2007.
About msystems
msystems has been transforming raw flash material into smarter storage solutions since 1989. From embedded flash drives deployed in millions of mobile handsets to U3 USB smart drives designed for leading global brands, msystems creates, develops, manufactures and markets smart personal storage solutions for a myriad of applications targeting high growth markets. msystems’ product lines include:
- mDrive (formerly DiskOnKey®) U3 USB smart drives for personal, portable computing
- mDOC embedded flash drives for mobile handsets and consumer electronics devices
- mSIM MegaSIM® series high-density SIM cards and mSIM M.MAR® series SIM cards and highly secure cards (available both from msystems and its subsidiary Microelectronica)