ISRAEL 
HIGH-TECH & INVESTMENT REPORT



Where we are quoted:

"Israeli Tech Stocks": Matt Ragas FindProfit 4/9/03
FindProfit, is one of America's most popular internet based real-time investment advisory services for US investors.

IHTIR was asked by editor Matt Ragas, formerly director of content development and the founding editor for Raging Bull, a leading financial internet community to comment on Israeli companies whose shares are traded on the American stock markets.

"The rationale for investing in Israel is simple. One of the highest rates of patents of any Western country, and among the highest level of scientific papers published, it reflects a vibrant and deep human resource pool. Our most capable young people when doing compulsory army service are included in the Taalpiyot Unit, which deals with highly advanced electronics technology. Many of them later become successful entrepreneurs for whom algorithms and leadership qualities are a natural.

We also have a supportive government policy and a second generation of entrepreneurs. I should also mention the arrival of one million Russian immigrants some 13 years ago. Many of them brought excellent basic scientific skills. With comparatively little knowledge of modern technology, they formed perfect partners for Israeli technologically oriented entrepreneurs who often took routes that defied conventional wisdom. It was a marriage of skills made in heaven."



High Tension in Israel's Tech Hub
By Farhad Manjoo
"Joseph Morgenstern, an Israeli technology consultant, was speaking from Tel Aviv, not far away, he said, from the cafe where a Palestinian suicide bomber struck last weekend. As he spoke late Wednesday, Israeli Defense Forces were laying siege to Palestinian cities.

But Morgenstern, like many others who commented on how Israel's high-tech sector might be affected by the turmoil, painted a surprisingly upbeat picture of the situation. The daily terrorist attacks, the warnings against travel, the precarious political situation -- these were all reasons to be concerned, Morgenstern allowed, but he said nobody in Israeli tech is panicking ... yet."



"Spot on" Prediction
On December 13 Joseph Morgenstern, Publisher of the Israel High-Tech & Investment Report, was quoted by Jennifer Downey in a Dow Jones Newswires interview: "Far from fearing that political consequences will take a toll on the shekel, Morgenstern would welcome a decline in the shekel's exchange rate in order to stave off dire economic consequences. I think a country of six million people has to maximize the return on its exports. It needs to have a rational exchange rate," Morgenstern said.


The Israel Medical Journal Association Journal Vol.4 Issue 1 Jan. 2002
"Growing Insulin Secreting Cells from Human Stem Cells" Israel High-Tech & Investment Report vol. XVII issue 11



Israel to Cut Taxes on Foreign Venture Fund Investors
Caesarea, Israel, June 20 (Bloomberg) -- Israel is cutting taxes on foreigners who invest in its venture capital funds, predicting the move will generate $100 million for start-up technology companies, Foreign Minister Silvan Shalom said. The change reduces Israel's 20 percent tax rate on foreign investors to whatever they would pay in their home country and affects mostly European and Asian investors, officials said. Investors in Germany, Holland, Belgium and Switzerland, for example, pay no taxes. Shalom said Israel is in talks with the Internal Revenue Service to ease rates for U.S. investors too.

The tax rate cut is an effort to address a plunge in foreign investment that the Bank of Israel said reached 71 percent in the first quarter, down to 1.5 billion shekels ($355 million) from 5.1 billion shekels in the same period last year. The Palestinian uprising, slowing growth and the slump in world stock markets are blamed for drying up the money.

Israel's perceived instability will probably negate the tax cut's attractiveness to investors now, said Joseph Morgenstern, a consultant and publisher of the Israel High Tech & Investment Report. Investors may do more to help growth at the Israeli businesses where they already have investments, he said, while they wait for the economic and political situation to improve before considering new investments.

``Venture capital is high-risk and high-rewards,'' Morgenstern said. ``Why would you really care about a 20 percent tax rate if you're going to make millions?''

Jonathan Ferziger in Caesarea



Future Wireless Technology From An Ancient Land
By Margo McCall, Business Editor Wireless Week
...by all indications, the United States is happy to have fresh players from a country that prides itself on quality technology. Israel has more companies listed on the Nasdaq than any other foreign country but Canada. "We have a saying here in this part of the world: God is great and so is the Nasdaq," says Joseph Morgenstern, the New York University-educated publisher of the Israeli High-Tech and Investment Report, who is working on a book about his country's high-tech scene. "Everyone dreams of succeeding in the vast American market. Anything innovated is always done with a view to overseas markets."

The surge in wireless and other technologies is the result of an abundance of skilled engineers trained in the military or at one of Israel's technology-oriented universities, a supportive government and plenty of venture capital.

Top management in many of Israel's most promising companies came from elite military units, where Morgenstern says they learned cooperation and formed valuable friendships. "When they left the army, these kids tended to form start-ups based on algorithms and highly advanced things they'd learned in the army. They were already team players. This army background has proved to be good in areas of electronics and wireless," Morgenstern says.

But Israel's remaking as a high-tech mecca did not happen overnight. In the early 1980s, Morgenstern says, "Israeli companies were going absolutely berserk scratching around for money." The country's first venture fund was established in 1984 by Don Tolkowsky, a former Air Force chief. It took him four years to exhaust his $24 million fund. The chief scientist's office in the 1990s set up initiative funds to help young companies and continues to supply seed money for fledgling ventures.

These days, funding is a lot more plentiful. Morgenstern estimates that the 70 venture capital funds now operating in Israel-including global players such as Lehman Brothers and Merrill Lynch-have a war chest of between $1.5 billion and $2 billion. During the second quarter of this year, 120 Israeli startups raised about $610 million. "In comparison with what it was in the '80s, money is sloshing in the streets of Tel Aviv and Jerusalem," says Morgenstern, who has raised money for a number of successful high-tech companies.



 

In 1991, Israel had only one venture capital fund worth $30 million. Today there are 46 funds, with a war chest of $3 billion, said Joseph Morgenstern, of the Israel High-Tech Investment Report.

Foreign investment in Israeli high-tech companies grew from $400 million in 1992 to $3.7 billion in 1997, with such investors as Softbank, owner of Ziff-Davis, which publishes Inter@ctive Week; Baan; General Electric and Shamrock taking lead roles, Morgenstern added.



American Banker has been the #1 authority in banking and financial services information for more than 160 years.

"Roughly 3,000 start-ups have been launched, not only by native Israelis but also by highly educated Russian immigrants. Twenty companies have debuted on Wall Street since 1995, or 30% of all the Israeli companies publicly traded here, according to the Israel High-Tech & Investment Report".


BusinessWeek Oct.13 1997 Issue
DESERT, NUKES, SPIES--AND A HIGH-TECH OASIS
"Rotem is exceedingly innovative," says Joseph Morgenstern, publisher of the Israel High-Tech & Investment Report."Its concentrating on areas [in which] it thinks it has an advantage. And it's got the benefit of relatively limitless budgets, which another emerging company would not have."



"The Future is Already Here: Israel's Computer Industry "

Jurgen Hogrefe Der Spiegel No.19 May 5, 1997

"Joseph Morgenstern who publishes the Israel High-Tech and Investment Report, responding to a request to characterize the qualities which identify the industry's personnel, said: 'That is our strength. We recognize a problem and plunge ahead towards a solution. As a result we take no detours and there is no going back'."


"High-tech Israel looks to the West"

Adam Jones The Sunday Times June 10, 1996

"Joseph Morgenstern, publisher of Israel's High-Tech & Investment Report newsletter, says a further $430 million coould be raised on Wall Street in 1996 if the trend continues. 'It looks like the party could continue until the end of the year,' he says.

The steady strean of new issues should continue. And Morgenstern says as many as 1,700 young Israeli companies could eventually be float candidates. "For a country of just 5m. people, it's one of the most unusual situations you can imagine," he says.