As we finally get to see some decent earnings coming out of Israeli companies that trade in the US, it seems that these companies have all read the same ” Prop up your stock” book. Can you say stock buyback? Companies like Commtouch (CTCH), Alvarion (ALVR), AudiCodes (AUDC) are among Israeli companies that posted good earnings, raised guidance and announced share buybacks.

I know that share buybacks are ‘tax efficient’ as well as they fatten EPS numbers, but how about doing something radical for investors?  Something like paying a dividend, or investing in growing the company. Doesn’t a stock buyback just mean that the company has nothing better to do with their money? Give some of your profits back to shareholders. Hey, there is an idea! For a great analysis of the pros and cons of buybacks, check out economist Stefan Karlsson’s blog.

All 3 aforementioned stocks have gotten nailed this year, so why not reward investors by paying a dividend. After all if we are only worried about being tax efficient, then just sell all your losing stock and take the tax loss. BTW nice article over at Bizzywomen.com, explaining tax losses.

After all I guess after the many Israeli companies that have provided lousy earnings results, we should just be happy that these companies beat estimates. That’s reward enough for investors.

Aaron Katsman, IsraelNewsletter.com

Disclosure: Author’s fund has a position in AUDC,ALVR. He has no position in any other stock mentioned as of 7/30/08.

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Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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Can you tell us a bit about AudioCodes?

Nachum Falek, CFO: AudioCodes (Nasdaq: AUDC) is a telecommunications firm focused entirely on Voice-over Internet Protocol, or VoIP.  We create hardware and systems to connect and secure networks.  We are leaders in feature richness and voice quality and have been in VoIP for 15 years, an extremely long time for this nascent market.  We are a pureplayer in VoIP unlike some of our competitors who still maintain legacy businesses.

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