Friday, January 26, 2007

Globes [online]: Magic Software

"Today I’ll take a look at Magic Software Enterprises (Nasdaq: MGIC; TASE: MGIC) one of the oldest software companies in Israel, and certainly the oldest of all the Israeli companies trading on Wall Street.
Looking at it from the birds-eye vantage point, why is the stock price so low? Maybe the current price of $2.50 isn’t that low? After all, this is a company with a strong balance sheet and $12 million in cash which has shown clear signs of emerging from its recent crisis and moving to profitability. Its has sales upwards of $61 million, a fine reputation with 2000 companies on Main Street, R&D centers in India and Israel, a good management, and other similar strong points. Yet despite all this, its market cap stands at around $80 million only. This looks to me like a value that is out of touch with reality, but let’s take a closer look at the company.
Magic was founded in 1983 by current chairman and CEO David Assia (who left the post twice for fairly long periods, and was then called back twice, essentially to put the company back on its feet, the last occasion being three years ago), and his friend and partner Jack (Yaki) Dunietz, who also founded Mashov Marketing and is one of Israel’s most experienced software managers. Magic was floated on Nasdaq in 1991 in one of the hottest IPOs of the time, and the reason for the success back then was not the amazing achievements that the company told everyone about, but was due instead to a single utterance by a commentator on CNN Financial. His pronouncement that “as far as I can see, there is only interesting flotation this week and that is California-based Magic Software,” turned the IPO from a lackluster event to a really hot one. "

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