ECI Telecom Ltd. (Nasdaq: ECIL), another potential "Israeli Nokia" which didn't quite make the grade, appears to be heading for the "Gaza chop shop," to coin the phrase first used 11 years ago by Efi Arazi, founder and former CEO of Scitex, to describe what could happen to that company if entrepreneur Davidi Gilo acquired it. Scitex, another company about which we had visions of it becoming an "Israeli Nokia", did indeed find itself in a chop shop of sorts, but it happened without Gilo stripping even a single wing off it. Having initially stood firm in their refusal to sell, the company's owners eventually did just that, of their own volition.
Elscint in medicine, Scitex in printing, ECI in telecommunications, msystems in flash, Mercury in software and a few others that I may have forgotten - we dreamed about all of them as being an "Israeli Nokia" and they have all been swallowed, or will soon be eagerly swallowed up, by the global giants. Overall, out of the entire high-tech and medical dream led by Uzia Galil, Dan Tolkovski, and the Recanati family under the impressive Discount Investment umbrella, we have been left with one large outstanding company in the one field that we are apparently the best at, defense. That company is Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT).
The truth is that we do have an "Israeli Nokia" in a field that we would never even have dreamed of back in the 1970s and not even in the 1990s - pharmaceuticals. That company is Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA). Its management and headquarters are located solely in Israel, its CEOs have always been Israelis, it has a market cap of $30 billion, almost a third of that of Nokia's, and it will be heading north to an even higher market cap within two to three years, once it adds another ethical drug or two to Copaxone.
Teva, as an "Israeli Nokia," was born out of the trauma of the 1980s, when it was on the floorboards. It struggled to pay salaries to its staff, and its legendary CEO Eli Hurvitz spent his time running from one ministry and health fund to another asking for down-payments for the employees' salaries, against future orders for drugs. Thanks to his efforts, which also included the bringing in of Koor Industries as investor thereby giving the company some breathing space, Hurvitz was able to set in motion a raft of courageous and successful overseas acquisitions that has continued to this very day, and which has elevated Teva to its current status as the "Israeli Nokia."
Published by Globes [online], Israel business news - www.globes.co.il - on June 19, 2007
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