Israeli Start-Up High-Tech Companies

How badly, on average, did Israeli start-up high-tech companies

perform in the period from July 2001 to date. In particular, what are

causes that have caused or contributed to their poor performance

during this period?

By way of background, I am writting a piece on the poor performance of

these companies and the reasons for their poor performance. I need

just 1 or 2 paragraphs of succinct well phrased material to include in

the piece.



One thought on “Israeli Start-Up High-Tech Companies

  1. industrious-ga

    For starters, if you didn't see the recent article about Israeli

    high-tech in by Jerry Borrell in Upside magazine, it can be found

    online (in two parts) at

    http://www.upside.com/texis/mvm/story?id=3c8e8aa51

    http://www.upside.com/texis/mvm/story?id=3c8e8b431

    Before moving onto some quotes and figures, the general reason for the

    poor performance of Israeli High-Tech companies in the past year is

    not unique to Israel. High-tech has been crushed by as much as 75%

    around the world, as witnessed by the NASDAQ.

    A good proxy for Israeli high-tech startups is Formula Holding Company

    (trades as FORTY on the NASDAQ). Formula is down about 55% in the last

    year, or almost 90% since its peak some two and a half years ago. If

    you chart Formula against the NASDAQ, you'll find that they track each

    other closely, except that the peak for Formula was twice as high. The

    following link shows Formula plotted against the NASDAQ on the MSN

    money site:

    http://moneycentral.msn.com/investor/charts/chartdl.asp?Symbol=forty&DateRangeForm=1&PT=5&CP=1&C5=6&C6=1999&C7=6&C8=2002&C9=0&ComparisonsForm=1&CC=1&CE=0&CompSyms=&DisplayForm=1&D9=1&D0=1&D4=1&D7=&D6=&D3=0&ShowChtBt=Refresh+Chart

    The leading site (in English) about Israeli business is Globes:

    http://www.globes.co.il/serveen/

    They have search feature on their front page that lets you choose an

    industry sector, like "information technology" or "telecom" and a

    subject you are interested in, such as "Startups & VC."

    I cannot supply direct links to the articles on the site, because it

    requires login (free registration). I'll give cite three "fair usage"

    examples from the past week, these article are the property of Globes.

    A June 10th article by Boaz Gilmore relates to the 3rd round of

    lay-offs at Trellis Photonics:

    "This was Trellis Photonic's third round of lay-offs, caused by the

    slump in the telecom and optical systems markets. Nine employees were

    laid off at the company's Maryland headquarters in July 2001, and the

    headquarters were moved to Jerusalem. Plans to build production plants

    in Maryland and Lod were shelved. A second round occurred in late

    2001, when the company’s Yokne'am branch was closed and 20 employees

    were laid off. The company said the measure was due to the

    difficulties in managing two distant development centers in Jerusalem

    and Yokne'am."

    Another article by Gilad Nass from June 9th relates to Dealtime

    closing its operations in Japan and firing 60. The company had 350

    employees just last year.

    "Dealtime.com now has a staff of 140, of which 85 are in its Netanya

    development branch. The company closed its joint venture with external

    investors in Japan, in which $10 million was invested, towards the end

    of last year. DealTime.com senior VP and general manager Eli Campo

    said the Japanese venture was closed because the Japanese market was

    not yet ready for the anticipated volume of online shopping. The

    German branch, in which media giant Bertelsmann invested $35 million,

    was consolidated with DealTime.com itself several months ago."

    In an article about Corsema from June 10th, Boaz Gilmore writes:

    "Start-up Coresma, a BVR Technologies(Nasdaq:BVRT) subsidiary, is

    cutting its employees' salaries by 15%. Well-informed sources said the

    company had recently fired three more employees, following the layoffs

    from two months ago. Coresma, formerly Netgame, develops and

    manufactures digital communications systems on cable TV networks.

    Intense competition in the cable modem market is probably the reason

    for the cutbacks. One of Coresma's main products is an end-user

    solution for digital information transmission on cable networks, which

    provides the customer with high-speed Internet access. Coresma CFO

    Doron Tamir declined to comment on the extent of the cutbacks."

    Note that all of these cases cite economic difficulties not related to

    the security situation within Israel. My own Israeli stock holding, a

    Ceragon (CRNT), has seen its stock slide around 40% in the past year,

    despite landing several big contracts, again due to the global

    downturn.

    I hope you find this information useful.

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