A year and a half after taking over as CEO of RAD Data Communications Ltd., Dror Bin feels ready to give his first interview to the Israeli press. Zohar and Yehuda Zisapel’s RAD is not a company with a lot of buzz surrounding it. When RAD does make the headlines, it’s usually with news of organizational changes, or shareholders’ interests, or other sensationalist and not-necessarily-positive developments. RAD is perceived as an unglamorous company, of little interest except in a professional context.
This year marks 33 years since RAD was founded in the early 1980s. Those were the early days of communications equipment for data-based communications - what eventually became the Internet. For the past two decades, technological infrastructures have remained practically unchanged, but, now, the rules of the market may change once again - a fact that gives RAD’s management hope of leaping ahead, and maybe even recapturing the potential the company had when it was founded.
RAD, which has primarily provided equipment for network sections between the network core and end-users (access infrastructures), sees itself as being in a pivotal position as a new age of telecommunications approaches. The hardware that transmits data packages between data centers and end-users is becoming more sophisticated, and service providers can improve their performance by using smart software, which also opens the door to business possibilities, without investing in expensive new hardware.
“Our goal is to grow quickly. As a result, we are much more open to the media and are also taking greater business risks,” said Bin of the upcoming opportunities. This applies primarily to the wave of innovation that is affecting the telecommunications world and is enabling separate software applications to be provided, for improved infrastructure management over standard hardware (NFV). “We have latched on to this trend,” says Bin, “We are really reinventing ourselves with NFV, and I am not saying this as a catchphrase, but as the real thing.” RAD’s involvement in this development comes on the software-side, despite its being a hardware company. The company has, for some time, been providing systems that enable improved network performance, and has recently released a new line of products called Distributed NFV, through which it will provide software applications available on remote server farms to support improved business opportunities for telecommunications providers. For example, mobile service providers will be able to install security applications in a location that is relevant for the end-user, and to charge for this service.
RAD may have been there 30 years ago with the technology and the business vision, but in terms of the bottom line, it was far from its potential. In an interview with “Globes” in 2007, Zohar Zisapel said that with a little more self-confidence and willingness to take risks, RAD could have been more like Cisco, the communications equipment giant, which grew to its current stature from a market share similar to RAD’s 20-30 years ago. The new trajectory in the world of mobile technology raises hopes that maybe this time will be different.
Bin says, “We are trying to position ourselves as leaders. We will not be Alcatel-Lucent or Huawei, but we want to further strengthen our leadership. RAD, for many years, kept a low profile, but it is a company with an extraordinary story, in global terms. This is a company that, for 30 years, succeeded in the telecommunications market, despite the fact that we are competing with Americans and Europeans, who have proximity to the market, and with the Chinese, who have an advantage in terms of costs.”
“Many changes were made”
Over the years, RAD evolved into a consortium of telecommunications technology companies. There are sixteen companies in the group today, some public - like Radware Ltd. (Nasdaq:RDWR) and Ceragon Networks Ltd. (Nasdaq: CRNT; TASE:CRNT), and some private. The founders, the Zisapel brothers, have significant holdings in most of the companies. According to the company’s website, the group had $1.2 billion in sales in 2012, and the only figure given about RAD itself is that the company had 7% growth in 2013. The sales can be estimated at over $200 million. The company has 1,000 workers, 300 in R&D.
Alongside the change in CEO, there was another significant personnel change in the company, when the chairman was replaced. Zohar, who led the company for most of its existence, left his role, and was replaced by his brother, Yehuda. They both remain on the board. Despite speculation that disagreements on business matters led to the change in roles, Yehuda referred to the matter in the past as, “something that has happened in our group many times, and is nothing unusual.”
Bin came to RAD after a short tenure as a venture capitalist at Viola Group’s Carmel Ventures, prior to which he held a number of senior positions at Comverse Inc. (Nasdaq: CNSI). It makes sense for a company seeking fast growth to bring in a CEO with an investor’s mindset, even though RAD never seemed like a company that would employ complex strategic processes to increase growth. “Many changes were made here in the last year - both in terms of processes and personnel,” he says, “but it is because of the strategic directions we are headed in.”
Is there a chance we will see RAD looking to raise money to support growth, or more intensive acquisitions?
“Right now, we have no money problem, in terms of the investments we need to make. If we succeed in this process, it will open many possibilities, and this is probably one of them. There is a chance that there will be more investments in companies, and we are definitely thinking about inorganic growth as well.”
Meanwhile, the only thing on the company’s agenda is establishing an additional development center in Israel, alongside the existing development centers in Ramat Hachayal, and in Beijing (the legacy of a small acquisition made several years ago).
Published by Globes [online], Israel business news - www.globes-online.com - on April 7, 2014
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