ISRAEL 
HIGH-TECH & INVESTMENT REPORT

from the March 2002 issue


Goldman Sachs: Unshackled Shekel May Boost Tech Companies Profits


Goldman Sachs said today that Israeli technology companies could experience a modest impact to profitability in 2002 if the shekel's exchange rate remained at current levels, or weakened further.

"Israeli tech companies under our coverage generate over 95% of total revenue in dollars, while 20%-50% of total expenses are shekel-based. While it is difficult to predict the specific impact of the shekel move on individual company results, we believe the current direction of the shekel versus the dollar is generally positive for margins among companies under our coverage," the investment bank said.

The companies with the highest percentage of total operating expenses in shekels included Comverse (Nasdaq: CMVT) with roughly 50%, Orbotech (Nasdaq: ORBK) with 35%, Check Point (Nasdaq: CHKP) with 25% and AudioCodes with 25%.

"While we expect some companies to leverage the devaluation in order to report higher operating profits, we would not be surprised if others use the benefit by investing more (in shekels) in sales and marketing as well as R&D, and in some cases lowering prices. In doing so, the companies can attempt to gain market share and potentially enhance distribution and their product portfolio without negatively impacting profitability beyond current 2002 plans," the analysts noted.


Reprinted from the Israel High-Tech & Investment Report March 2002

Click HERE to request further information.
Click HERE to go BACK.