Israel Opportunity Investor

Israeli hi-tech investments on fire

Aaron Katsman — Wed, 25 Jan 2012 19:40:24 +0000

Who said that Israeli hi-tech is dead. It’s alive and well and setting records. In 2011, 546 Israeli or Israel-affiliated high-tech companies raised a total of $2.14 billion from Israeli and foreign VC investors, according to data for the Israel Capital Venture Research Center (IVC) and KMPG.

How often have we heard that foreigners are going to move away from Israel and look twords China. Even Israeli VC’s constantly complain about the issue, of course their rallying cry that the governemnt needs to subsidize Israeli hi-tech sure stinks after a report like the IVC’s.

According to the IVC, ” In 2011, the amount raised by Israeli companies in financing rounds for foreign investors alone was $785 million or 37% – the highest in the past decade. For comparison’s sake, in 2010 only $269 million were raised from foreign investors (21% of the investments) and in 2009 – $ 205 million (18%). In the fourth quarter of 2011, foreign investments amounted to $218 million – an 8% decline from the $236 million in the previous quarter, which had the highest amount of foreign investments in the past decade.In 2011, the amount raised by Israeli companies in financing rounds for foreign investors alone was $785 million or 37% – the highest in the past decade. For comparison’s sake, in 2010 only $269 million were raised from foreign investors (21% of the investments) and in 2009 – $ 205 million (18%). In the fourth quarter of 2011, foreign investments amounted to $218 million – an 8% decline from the $236 million in the previous quarter, which had the highest amount of foreign investments in the past decade. “

Don’

Israeli Researchers: Personal Listening Devices Causing Hearing Loss

Aaron Katsman — Thu, 05 Jan 2012 12:22:28 +0000

It was just a matter of time before we got this news. I always felt that explosion of Personal Listenting Devices (PDL) was going to cause hearing problems in teh younger generations. It always seems that people have soemthing in their ears that they are listening to and at some point that would be problematic. Well along came a group of Israeli researchers from Tel Aviv University’s Sackler Medical Faculty, with new evidence that younger people are more apt to suffer hearing issues than in previous generations.

According to a report in the Jerusalem Post, ” Users listen to crystal-clear tunes at high volume for hours at a time, a significant rise in sound quality compared to the days of the Walkman. But, says Prof. Chava Muchnik of TAU’s department of communication disorders and colleagues, these advances have also resulted in personal listening devices causing harm to hearing.”

It’s the constant listenting that seems to be the problem.

The article continues, ” One in four teens is in danger of early hearing loss as a direct result of these listening habits, says Muchnik and her team, who studied teens and music listening habits, and took acoustic measurements of their preferred listening levels. The results, recently published in the International Journal of Audiology, demonstrate clearly that teens have harmful music-listening habits. “In 10 or 20 years, it will be too late for a generation of young people suffering from hearing problems much earlier than expected from natural aging,” says Muchnik. Noise causes damage to the tiny hairs in the inner ear that enables it to hear, and continuous exposure to loud noise is a slow and progressive process that many people don’t notice, Muchnik says. Young people’s hearing can thus deteriorate as early as their 30s – much earlier than past generations.”

With teens constantly using their PDLs the question is what can be done to stop the damage.

“Yet there is a real need for additional music-risk criteria to prevent music-induced hearing loss, Muchnik says. In the meantime, she recommends that manufacturers adopt the European standards that limit the output of PLDs to 100 decibels. Currently, maximum decibel levels can differ from model to model, but some can go up to 129 decibels. Steps can also be taken by schools and parents, she says. Some school boards are developing programs to increase awareness of hearing health, such as the “Dangerous Decibels” program in Oregon schools, which provides early education on the subject. Teens could also choose over-the-ear headphones instead of the ear buds that commonly come with an iPod.”

Olmert Goes for Record Number of Indictments

Aaron Katsman — Thu, 05 Jan 2012 11:51:02 +0000

Go for it. That was the famous NIKE slogan years back. Apparently former Israeli PM Ehud Olmert lives by the slogan. I am not sure what the actual record is for indictments of former prime ministers, but Olmert is doing his best to challenge for the title. Once again he was indicted.

According to Globes, ” State Prosecutor Moshe Lador today indicted former Prime Minister Ehud Olmert, the former head of the Prime Minister’s Bureau Shula Zaken, former Jerusalem Mayor Uri Lupolianski, former Bank Hapoalim chairman Dan Dankner, and other officials in the Holyland real estate project scandal. This is the second trial involving Olmert. The Holyland project is one of the worst cases of corruption in Israeli history. Olmert has been indicted for accepting bribes. This is the first time that he has been indicted on this charge; in his other trial, the main charges are aggravated fraud, fraud, and breach of trust.”

I love the end of this report. That this is the first time he is getting nailed on bribery charges. Mazel tov! Clearly it was boring just getting caught for the same old fraud and breach of trust. Got to keep it fresh!.

Nothing like a little corruption at the top.

Israel predictions for 2012

Aaron Katsman — Thu, 05 Jan 2012 10:31:29 +0000

It’s that time of the year again to make my Israeli predictions for 2012.

1- After about 4 years of ending the year at about 3.8 shekels to the US dollar, finally the Shekel weakens and finishes the year at 4.25.

2- In an effort to consolidate power PM Benjamin Netanyahu calls for early elections, and indeed wins re-election but by a vary narrow margin.

3- No need for Israel to bomb the Iranian nuclear facilities, as small explosions continue to mysteriously go off around Iranian military installations, thus ‘mysteriously ending/delaying Iranian nuclear hopes. ( Can you say MOSSAD!)

4-Israel wins 2 medals in the summer olympics

5- Higher taxes coupled with a sluggish global economy are culprits as Israeli GDP growth slows to 2.4%.

6- At least 6 publicly traded Israeli company’s are bought out buy US firms.

7- The slowing economy claims one more casualty. After a 9 year run, the Israeli real estate market cools.

Happy new year.

PM Netanyahu Hits Investors With Big Tax Raise

Aaron Katsman — Thu, 15 Dec 2011 11:30:10 +0000

Israelis are beginning to reap the fruits of this past summer’s protests; the problem is that the fruit may be rotten. While some in the middle class may have received some tax relief thanks to the recently passed legislation based on Trajtenberg committee recommendations entitled “The Bill to Change the Tax Burden,” those that actually create jobs received a slap in the face. Not only were corporate tax rates increased (when they were supposed to continue to be decreased by 1% every year for the next 6 years), but both capital-gains taxes and taxes on dividends were raised as well. Now those that love to vilify corporate greed and “piggish capitalism” ( and it’s really cronyism, not capitalism, that’s the problem in Israel) are now doing cartwheels in the streets, as “the rich guys got what they deserved.” The problem is that the real engine of any economy, namely small-and mid-sized businesses, just received another tax increase and that increased burden will probably end up costing many jobs. In addition, transferring wealth from the wealthy to the less wealthy has never worked to help the lot of those less fortunate. What needs to be done for the lower and middle class is not just to cut taxes – which is important – but to incentivize them to invest their money in a business, real estate or stock market. This is the way to grow one’s net worth. By increasing the tax on investment, you are stifling the opportunity for economic prosperity for the “have-nots.” What happened to Bibi? The real shocker in this is that Prime Minister Binyamin Netanyahu threw his support behind the plan. Everyone is aware of Bibi’s economic philosophy, which is based on the Reagan/Thatcher model, so why the sudden change? It was Netanyahu’s plan of cutting taxes across the board on income, corporations and capital gains that saved the economy from disaster a decade ago, and laid the groundwork for the robust economic expansion that is the envy of the world. Now, in the face of a global economic crisis and a slowing Israeli economy, he is cutting the lifeline of the economy? The cynics among us would say that he did this to: A) quell any further protests that could wreak even more economic havoc, and B) gain popular support and further his reelection hopes. Whatever the reason, it could have damaging economic consequences. Lower Revenues While supporters of the capital-gains tax increase say that this will increase revenues to the government that it can then spend on a host of social issues, the data shows that revenues will drop. In a ground-breaking paper published by the Adam Smith Institute titled “The Effect of Capital Gains Tax Rises on Revenues,” over 50 years of data was collected and it showed that increases in capital gains tax rates actually lowered the revenues that governments took in. The paper is a must-read for those interested in the issue (too bad the Finance Ministry missed it!). Here are some data points relating to the US economy that are worth mentioning: “In 1968, real capital-gains tax receipts were $34 billion at a 25 percent tax rate. Over the next eight years, the tax rate was raised four times, to a high of 35%. But with the tax rate almost 10 percentage points higher in 1972 than in 1968, real capitalgains tax revenues were only $27 billion – 21% below the 1968 level. “In 1996, the year before the capital-gains tax rate was cut from 28% to 20%, net capital gains on assets sold were roughly $335 billion. A year later, capital gains had leapt to $459 billion. (The tax cut was retroactive to May 1997). In 1996, the [US] Treasury collected roughly $85 billion in capital gains revenues. In 1997, those tax payments jumped to $100 billion.” There are many more examples of this. Impact on TASE Stock market movement as a result of increases/decreases in capital-gains rates can go both ways. The current issue for the Tel Aviv Stock Exchange (TASE), which has dropped significantly this year, is that investors haven’t really been in the mood to buy local stocks. Now add to the equation these new measures – and more to come – that could hurt growth, and you have a recipe for continued local stock-market weakness. The irony is that this actually is going to hurt the very people that you are trying to help. Thanks to caving in to populism and political survival, it looks like the lower and middle class will continue to spin their wheels and run in place, and not enjoy any upward economic mobility anytime soon. Aaron Katsman is a licensed financial professional both in the United States and Israel, and helps people who open investment accounts in the United States. Securities are offered through Portfolio Resources Group, Inc. a registered broker dealer, Member FINRA, SIPC, MSRB, SIFMA. For more information, call (02) 624-0995, visit www.aaronkatsman.com or email aaron@lighthousecapital.co.il.

Apple to Open R&D Center in Israel

Aaron Katsman — Wed, 14 Dec 2011 18:40:13 +0000

As if Israeli hi-tech needs another feather in the cap. Well it just got a huge one. Apple (AAPL) has announced that they plan to open their first non-US R&D center in Israel. Wow!

This is huge for Israeli hi-tech. According to Globes : ” ?????Apple has hired Aharon Aharon, a veteran player in Israel’s high tech industry, to lead the new development center. Although Apple is a global innovation leader, the company is a relatively small investor in R&D. The producer of the iPad and iPhone invested $2.4 billion in R&D in 2010, which was only 2% of its revenue, much less proportionately than other high-tech companies.

Apple’s deployment of R&D activities is in line with this policy and the company has only one technology development center, which is at company headquarters in Cupertino, California. All activities outside of company headquarters revolve around marketing, sales and support. Strategic development is carried out at home. The planned Israel center will therefore be the company’s first such center outside of its California headquarters.”

With Apple coming to Israel, it’s now offcial that all the who’s who of hi-tech now has an operation in the holyland. Pretty impressive.

Which Israeli Tech Firms Are Headed For Billion Dollar Club?

Aaron Katsman — Wed, 04 May 2011 13:42:28 +0000

Remember back to the heady days of the internet bubble. If you had 4 letters in your ticker you were sure to rise everyday and if you were Israeli, you were headed for a billion dollar market-cap. Well, 11 years later and outside of the Checkpoint’s and Teva’s there aren’t too many Israeli companies breathing that kind of air.

Globes has an interesting article today which talks about which firm smay hit the magic number in the next year. I certainly wouldn’t use the article as a recommendation to buy any of the stocks, but it is an intersting read. More interesting though is if you take a step back and look at teh greater

NICE(LY) Done!

Aaron Katsman — Wed, 04 May 2011 13:31:32 +0000

Israeli hi tech darling Nice Systems($NICE) released strong earnings today.

According to Globes, ” NICE Systems Ltd. (Nasdaq: NICE; TASE: NICE) raised its guidance for the second quarter and full-year of 2011, after publishing strong revenue and profit growth for the first quarter, beating the analysts’ forecasts. NICE’s revenue rose 15% to $187 million for the first quarter from $162.6 million for the corresponding quarter of 2010. The company beat the analysts’ consensus of $181.5 million.”

this report is another in a long line of Israeli stocks that trade in the U.S. to report great earnings. Where once Isareli company’s had great technology but couldn’t execute a business plan, it appears that times are chnaging and these company’s are turning very profitable.

Israeli Stocks in U.S. Earnings Highlights

Aaron Katsman — Tue, 03 May 2011 15:32:00 +0000

Here are a few highlights of some recent earnings reports from Isareli companies that trade in the U.S.

Allot Communications Reports Earnings Spike

Wimax Leader Alvarion Sees Profit Ahead

The Next Teva: Perrigo Reports Strong Numbers…Again

Audicodes($AUDC) Scores Huge Win in Deal With Blackberry Maker Research in Motion Ltd.($RIMM)

Aaron Katsman — Tue, 03 May 2011 15:24:16 +0000

With collaboration deals already signed with Microsoft (Nasdaq: MSFT), and Alcatel-Lucent SA (NYSE: ALU), the Isareli tech company Audiocodes has another feather to add to their cap with the announcement of a deal with Research in Motion. The company has been firing on all cylanders and this latest scaore will only help in the company’s growth.

Globes reports AudioCodes COO Lior Aldema as saying, “Enterprise mobility is a strategic opportunity that AudioCodes continues to pursue. Our ability to enable deployments of BlackBerry Mobile Voice System 5 for legacy PBX and new IP-PBX environments demonstrates the important role AudioCodes plays in this explosive market.”

Once again Isare