After several days of speculation of different kinds, today Modu revealed the real significance of the difficulty it has experienced in raising the cash to carry on. The company will lay off about 110 employees, about 90 of them in Israel, and will emerge with a workforce of about 130.
The difficulties don't frighten Dov Moran, the moving force behind the company, who says in a first interview after the move, "Unfortunately we still haven't reached a stable position. M-Systems too wasn't the most stable place in the world at the beginning, and there were period when I didn't have enough money to pay salaries. There were also periods when M-Systems was starting out when I went hungry. With Modu, we tried to start out big, and I believe that the company will reach the status of a large, stable enterprise, but it's part of the risk attending a company at the beginning of its career that its existence and continued activity are not assured. I always said Modu wasn't a start up, but I recognize that we are one for all that. I hope these will be the last layoffs."
There's a feeling that the Dov Moran of M-Systems wouldn't have laid people off so easily. What has changed?
"I've stayed the same person," Moran protests. "At Modu, and in every serious company, the workers come before everything. That's how it should be. But at every company, you have to look at performance, and at M-Systems there were layoffs here and there of unsuitable employees. I don’t think these layoffs would have been required had it been possible to raise the money we need to raise. I also believe that the company won't stay this way. I believe we'll get onto a track of growth and expansion, and I believe that we will be able to reabsorb many of those we have laid off."
Have the aspirations for the company changed?
"I still see the same goals. But perhaps it's a matter of time and degree of success. What drove me was setting up a big company. I'm not doing it to become richer, or more respected, or out of boredom. I have goals, and I think that, in principle, it will happen, it's a matter of time."
In the past, you predicted that the company would have sales of $1 billion within five years. Do you still have the same ambition?
"In 2001, when the previous crisis began, I was drawn into saying that despite the difficulties (M-Systems' sales fell by more than half at the time, S.S.), we would have sales of $1 billion within five years. It was said somewhat in jest, but nevertheless it happened.
"As far as Modu is concerned, I said what I said seriously, and I still think that way. We were then on the eve of a crisis that has caused some delay. It's hard to raise big money for a company that wants to be big. Up to 2000, M-Systems raised less than $20 million, and then we raised another $150 million, and that gave us the possibility of growing to $1 billion sales in 2006. There are companies that need financial investment in order to grow. If you want to construct a building with stable foundations, you need a lot of money. We need more, and I believe that we will come through this and that it will be alright."
You need to raise $50 million. Do you stand a chance of succeeding?
"We are in the process of raising money that will take us to 2011 at least. I expect that at the beginning of 2010, when we will have the next generation of the product, there will be agreements with companies in more important countries, and that will be more attractive to investors. I estimate that we will be able to raise enough money to last us until an IPO. The economic situation isn't a triviality, and in the Israeli high-tech industry there aren't large investment entities."
Published by Globes [online], Israel business news - www.globes-online.com - on November 11, 2009
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