Transcript Telecom 2006 - Confindustria

The Israel High Tech Industry
Elisha Yanay
Sr. VP Motorola Inc
GM Motorola Israel
former Chairman Israel Association of Electronics and Software Industries
(IAESI)
NOV 26 2008
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• Population: 7.3 M
ISRAEL• Households: 1.8 M
• Urban Population: 91.5%
• Area - grand total 22,145 sq. km
• GDP(ppp): US $ ~$195,308m
• GDP Per Capita: US $ K$31,767
• Unemployment 6.8%
• Fixed line Telephone Subs – 2.9M
• Mobile – 7.7M (106% penetration)
• Internet Users: 2.5M (BB): 1.5M)
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ISRAEL ELECTRONICS & SOFTWARE INDUSTRIES
SALES & EXPORT (M$)
22,000
2,000
2,500
2,400
17,700
16,000
14,200
Sales
13,400
2,300
2,300
10,870
12,250
2,280
13,000
9,130
8,050
4,000
6,700
6,000
5,480
8,000
2,320
10,000
2,330
12,000
2,400
14,000
10,740
2,500
16,000
2,500
18,000
2,700
20,000
2,900
$40Bn
Export
0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
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Aerospace & Defence
Consumer
Computer Hardware Communications
Industrial
Medical
Aftercare
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Security Applications
Semiconductor
Transport
ISRAEL ELECTRONICS & INFORMATION INDUSTRIES
2007 - 20,700 M$
Medical
Systems
Civilian Comm.
& Telecomm.
22.9%
8.8
%
Software
23.7%
13.4%
Components
17.8%
Industrial
Equipment
13.4%
Defense
Systems
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TELECOMMUNICATIONS EQUIPMENT
 Fiberoptic & Photonic Systems
SDH, SONET
 Access – XDSL
23%
 ATM, Frame Relay
 IP Networks – Voice, Video, Data, Multimedia
 Routers, Load balancing
CHECKPOINT
 Test Equipment, Quality Monitoring of Networks
SCOPUS
 3G Applications
OPTIBASE
 Home Networks
ZORAN
 Storage Area Networks
TELRAD
 Wireless Local Loop, Microwave
ECI
 VPN, Firewalls
TADIRAN
RAD
 WiMAX
GILAT
 Video-Compression, Video-Conferencing & Video
MOTOROLA
Networks

ALVARION
etc..
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MAJOR MILITARY SYSTEMS
Missiles and Guided Weapons
 Anti Aircraft and Anti-Missiles Systems
 Radars - Airborne, Naval, Ground
 EW Equipment
 Fire Control Systems
 Command, Control, Communications
and Intelligence Systems
 Avionic Equipment
 Platforms (Aircraft, Tanks…) Retrofit and Upgrading
 Navigation and Positioning Equipment
 Tactical Airborne, Naval and Ground Communications
 Sights and Night Vision
 Simulation and Training Equipment

13.7%
ELBIT
IAI
ELTA
ELISRA
MAGAL
NICE
TADIRAN
RAFAEL
AERONAUTICS
BVR
etc,…
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MAJOR INDUSTRIAL EQUIPMENT
 Computerized Production Equipment

Computerized Control Systems

Test Equipment

Training and Education Systems

Consumer Products

Security Equipment
13..4%
Kodak-CREO
Degem
MER Group
LIPMAN-Verisign
M-Systems
NDS
ORBOTECH
RAPAK
VISONIC
CROW
KP electronics
Motorola
Magal
etc…
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MAJOR MEDICAL EQUIPMENT

Imaging and Diagnostic Equipment

Surgical and Treatment Equipment

8,8
%
Monitoring Systems
ELRON
Given Imaging
Lumenis
Philips
CADENT
BioView
Algotec
GE
Rimed
Oridion
etc…
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ELECTRONIC COMPONENTS
 SEMICONDUCTORS
Design Centers
 Manufacturing Facilities
 PASSIVE COMPONENTS
 Resistors & Networks
 Capacitors
 Transformers
 Batteries
 P.C. Boards
 ACTIVE COMPONENTS
 Tubes
 Power Supplies
 Oscillators
 Detectors
 Microelectronic Components
 Microwave Components

13,4
%
Eltek
NDS
Vishay
Intel
Freescale
Texas Instrument
Zoran
DSP group
Analog Devices
etc..
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SOFTWARE
 INTERNET
 MULTIMEDIA
 SOFTWARE – PRODUCTS
23.7%
 SOFTWARE – TURNKEY
PROJECTS
 SOFTWARE -
SUBCONTRACTING
AudioCodes
BVR
CyOptics
ECI
Checkpoint
IBM
Formula
Radware
Comverse
Amdocs
etc..
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ISRAEL ELECTRONICS & INFORMATION INDUSTRIES
2006 - 18,700 M$
36%
39%
EUROPE
USA
5
%
20%
ROW
ASIA
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The new challenge to 2010
$8,6T
The Challenge
X2
$2,7T
2003
$11B
X2 ??
2017
$40B
$21B
2017
2003
We have the human resources
necessary
2003
2007
2017
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HIGHER EDUCATION IN ISRAEL
ELECTRICAL & COMPUTER ENGINEERING & COMPUTER
SCIENCES
Academic
Year
Number of
1st Year
Students
Number of
Graduates
Retraining
Until
1994
1,200
1,000
1998
4,860
2,280
3,905
1999
5,800
2,500
2000
6,653
2001
% of
Universities
1st Year
Students
% of
Colleges 1st
Year
Students
100%
0%
6,185
73%
27%
4,870
7,370
62%
38%
4,040
5,238
9,278
54%
46%
8,030
4,300
3,970
8,270
45%
55%
2002
8,000
5,000
3,475
8,475
2006++
8,000++
~8,000
46%
54%
21,458
Total
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Engineers graduates per year in 2006
•Israel 8000 engineers /year (pop 7.2M) 0.11%
•France 30 000 engineers/year, (pop 64M) 0.046%
•UK
25 000 engineers/year (pop 60M) 0.04%
•USA 74 000 engineers/ year
(pop 300M) 0.024%
•China 600 000 engineers/year (pop 1.3Bn) 0.0046%
•India 400 000 engineers/year (pop 1.1Bn) 0.036%
•Japan 90 000 engineers/year (pop 127M) 0.07%
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Foreign Investments
in Israel
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Foreign Investment in Israel 2006/7
4,000$M
4,500$M
1,500$M
800$M
300$M
150$M
150$M
140$M
90$M
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Foreign Investment in Israel 2006/7
90$M
76$M
50$M
Med Impuls
40$M
12$M
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Foreign Investment in Israel 2006/7
50$M
75$M
100$M
54$M
245$M
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Largest Recent M&A Transactions Of Israeli Companies
Israel continues to attract leading US corporations, looking for established small/mid-cap
companies with superior technology and a niche market.
Date
Announced
7/25/2006
5/5/2006
7/31/2006
3/17/2005
2/12/2007
4/10/2006
7/18/2006
4/4/2006
4/18/2006
12/21/2006
8/11/2005
1/13/2005
1/4/2005
4/28/2006
10/24/2006
4/10/2006
11/8/2006
7/11/2006
5/9/2006
3/27/2006
3/17/2006
2/9/2005
12/5/2005
11/28/2006
9/26/2006
7/26/2005
1/9/2006
7/12/2006
2/25/2005
Target Name
Mercury Interactive
Iscar
M-Systems
Agis Industries
Witness Systems
Lipman Electronic Engineering
Cramer Systems Group
Passave
Qpass
Disc-O-Tech Medical Technologies
Scitex Vision
Verisity
Tecnomatix Technologies
Tekelec (IEX Corp)
PowerDSine
NetCentrex
Topio
ColBar LifeScience
Kashya
Identify Software
Sightline Technologies
Modem Art
Cyota
FolloWap
Gteko Technologies
Sheer Networks
Systinet
Uri-Dent
Oplus Technologies
Buyer
HP
Berkshire Hathaway
SanDisk Corp.
Perrigo
Verint Systems
VeriFone Holdings
Amdocs
PMC Sierra
Amdocs
Kyphon
HP
Cadence
UGS
NICE Systems
Microsemi
Comverse Technology Inc
Network Appliance
Johnson & Johnson
EMC
BMC Software
Stryker Corp.
Agere Systems
RSA
Neustar
Microsoft
Cisco Systems
Mercury Interactive Corp.
Denstsply International
Intel
Business Description
Business technology optimization solutions
Precision carbide metal working tool provider
Data storage products
Generic pharmaceutical product provider
Workforce optimization software provider
Online payment solutions
Operational support systems software
System-on-a-chip solutions
Digital commerce software
Developer, manufacturer and marketer of implatable devices
Wide-format printer manufacturers
Provides software used to verify electronic system designs
Manufacturer of process management software
Workforce and performance management software
Integrated circuit provider for ethernet power implentation
Voice and video telecommunication solutions
Software developer for enterprise application
Biosurgical products
Enterprise data protection solutions
Problem resolution application software
Endoscopic solutions
Developer of system-on-a-chip solutions
Online security provider
Communications software for network operators
IT and enterprise software
Intelligent network and services provider
Application software
Dental crowns providers
A fabless semiconductor company
Total $15Bn
(1) Transaction size and multiples include target company cash and debt when avaialble.
(2) Adjusted Revenue multiples based on TTM value.
Sources include Jefferies Broadview estimates, IVC Resource Center, Capital IQ and selected press releases.
Adjusted
Transaction
Size ($m)(1)
$4,500.0
2,500.0
1,550.0
818.0
781.8
660.5
375.0
300.0
275.0
240.0
230.0
229.0
212.8
200.0
182.8
167.0
160.0
159.0
153.0
150.0
150.0
145.1
145.0
139.0
110.0
109.5
105.0
100.0
100.0
Adjusted
Revenue
Multiple(1,2)
5.7x
2.8x
1.9x
2.2x
3.8x
2.8x
3.8x
N.A.
6.5x
N.A.
1.6x
4.4x
1.9x
N.A.
5.4x
3.3x
53.3x
N.A.
N.A.
6.0x
N.A.
N.A.
12.6x
5.6x
6.1x
N.A.
N.A.
N.A.
N.A.
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Major Multinational Companies
with a Design Center in Israel
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Some of Israel’s Visible Companies
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FOREIGN ELECTRONIC SUBSIDIARIES IN ISRAEL
(PARTIAL LIST)
* Design & MFG
Intel *
 Microsoft
 IBM
 Sun Microsystems
 Cisco
 3 Com
 HP*
 Texas Instruments*
 National S.C
 ST Microelectronics
 Infineon
 Analog Devices
 Vishay*
 AVX (Kyocera)
 General Electric
 Philips Medical
Flextronics*

Motorola*
 Lucent Technologies
 Avaya
 Nortel*
 Siemens
 Alcatel
 Philips
 Ericsson
 Nokia
 ADC
 Qualcomm
 Applied Materials
 KLA - Tencor
 Kulicke & Soffa*
 BAE Systems Ind.
 Astronautics
Sanmina-SCI*

Berkshire
 Alcatel Lucent
 Verifone*
Kodak*
 Nortel
 SanDisk
 EMC
 Stryker
 TA associates
 Google
 Xerox
 Sun
 CA
 Microsemi
 AMS
 Pricer
EPIX
Etc…

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$4.1 billion !
Asked how come he chose Israel as his first investment outside America,
Buffett's response was:
"Some Americans came looking for oil, so they didn't stop in Israel.
We came looking for brains, so we did stop in Israel."
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CRAIG BART: former Intel CEO
( visiting Israel )
• “Apart from the 6,000 jobs that we have provided here, in my opinion the
contribution to Israel lies in the fact that Intel has attracted other
companies to invest in Israel and to create an entrepreneurial
environment. Globally speaking, Israel is in 3rd place in terms of IP and is
a very good place for opening businesses. The level of education in
Israel has helped us expand. Israel’s ability to supply very good scientists
has helped us, and the government’s positive attitude has helped us
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attract investments.”
Ed Zander, Motorola CEO, visit to Israel
• -----Original Message----From: Zander Ed-AEZ111
Sent: Sunday, November 14, 2004 10:57 PM
To: Yanay Elisha-BCMS54; Nottenburg Richard-arn021
Cc: Brown Greg-CGB025
Subject: RE: Your visit to Israel
Elisha- I had a great time. You and your team did an outstanding
job. I was continually impressed by their knowledge of the
business, opportunities and issues and great work ethic. Motorola
has a jewel in it it's Israeli operation thanks to you and your senior
team. Hope to see you soon. Regards, ed
•
[email protected]
847-576-3000
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Bill Gates, Microsoft CEO, made his
first trek to Israel
“Considering the density of Israeli start-ups and
local successes, Israel is like a bit of Silicon
Valley.
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"There are some fabulous, extraordinary
success stories of technology companies
here in Israel.”
• Ellison had specific advice for Israeli firms, saying that
the country’s technology sector has matured to the point
that it needs to begin looking to cheaper sources of
research services.
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40
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• Great talent driving Israel ’s success
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Israel Is The Leader Among Non US Countries
Listed on NASDAQ

Israel maintains the largest number of companies on NASDAQ

Among these countries, Israeli companies accounted for 40% of IPOs on NASDAQ in 2006.

Technology remains the dominant segment
Recent Israeli
Israel 71
NASDAQ IPOs
Canada 59
U.K. 10
Netherlands 9
Hong Kong 8
Japan
8
Singapore 7
France 6
S. Korea 5
India 3
Taiwan 2
Germany 2
0
10
20
30
40
50
60
Number of Companies Listed on NASDAQ
Source: NASDAQ as of September 2007.
70
80
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18
(2006)
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What do we need to continue our success?
• Excel in our education – aspire to being the best in the
world
• Keep raising the bar in education
• Teach innovation and creativity
• Strengthen partnerships between academia and industry
• Support sophisticated, small ( 20-50 $M) industries – if
you want to be large, gather together many small…
• Government support should match or even exceed other
countries’ incentive plans
• $ - Shekel challenge
• Keep pushing!
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