Aaron Katsman
www.IsraelNewsletter.com  

With 2007 about to finish, it’s time to look forward to 2008. Here are a few of my predictions for the new year. Before I start I just want to make clear I don’t expect anyone to hold me to what I say, but of course if I actually get something right, rest assured I will let you know about it.

1- At some point during the year the price of crude oil will trade below $75 a barrel. This will be great for the consumer as they save a lot of money at the pump, and will cause a crashing of many alternative energy stocks, especially the Solar plays like First Solar(FSLR).

2- There will be no recession in the US economy, despite the best efforts of the media to “will” one. While the economy should slow somewhat during the first half of ‘08, the economy will grow enough to stay out of a recession, and the second half of ‘08 should bring back 4+% GDP growth.

3- The Rudy Giuliani/John McCain ticket will surprisingly win the US presidential election. With Republicans given virtually no chance to hang on to the White House, with a strong economy and the continued  new-found success of the war in Iraq, they not only win but win back control of Congress as well.

4- Late in the summer the current Israeli government headed by PM Ehud Olmert will fall, and new elections will be called.

5- Picking up from a lackluster ‘07, with regard to M&A of Israeli publicly traded companies in the US, ‘08 will have no less than 6 major deals. Look for Gilat(GILT), Retalix(RTLX), Commtouch(CTCH), Comverse Technology(CMVT.pk), CEVA(CEVA), and Fundtech(FNDT) to be acquired.

6- The earth will cool, there will be no global warming.

7- After completing an undefeated season and winning the Super Bowl, the New England Patriots’ winning streak is snapped in week 3 of the ‘08 NFL season.

8- As much as I would like, most of these predictions will not come true.

We should all have a year of health, and happiness.

Disclosure: Author’s fund holds a position in GILT,CMVT.pk,CTCH,RTLX and FNDT. He has no position in any other stock mentioned as of 12/31/07.

Please see our Disclaimer HERE.

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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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By Zack Miller

www.IsraelNewsletter.com 

CIBC launched coverage of CEVA Inc. (CEVA), a leading DSP-core licensor and innovator. While many investors abroad may not know what DSP is, Israel has a long tradition in furthering DSP technology.

For Luddites like us, CIBC has included a DSP Industry primer. Outtakes are below:

The DSP Industry

What are DSPs?

Digital Signal Processors, DSPs, are specialized processors designed for standalone use, most often used for real-time processing of digital signals in a range of devices. DSPs are at the core of next generation personal communications, audio and video devices. They are fast, easy to program, extensively libraried and inexpensive.

What is driving their growth?

These devices will continue to drive high performance applications such as mobile handsets, digital cameras, IP set-top boxes, wireless communication devices, wired communication devices, digital portable audio and video players, and smart handheld devices.

In-house or Outsource?

With more complex designs and shorter design cycles it is no longer cost efficient, and becoming progressively more difficult, for most semiconductor companies and designers to develop the technology in-house. Therefore, companies increasingly rely on licensing other intellectual property, such as DSP cores, from third parties such as CEVA.

DSP Industry Revenue Growth

Driven by handset unit growth (as mobile technology moves to 3G and beyond)
and by increased usage in consumer electronics and automotive applications, revenues from DSP sales are expected to grow at a 14% CAGR through 2010, rising from $7.6 billion in 2005 to $14.8 billion in 2010.

DSP Market Share

The DSP market is highly concentrated, with five players controlling over 90% of the market in 2005.

1. TI held the No. 1 position in 2005 with 58% market share, with its leadership position in GSM, GPRS, and UMTS baseband chips and its strong ties to handset leader Nokia.
2. Freescale was No. 2 with 14% share in 2005, much of it derived from its relationship with its former parent company, Motorola.
3. Agere fell one spot to No. 3 as NEC discontinued Agere-based 3G platforms in 2004.
4. Rounding out the top five were Analog Devices
5. NXP/Philips, both with 6% share.

Other vendors include Toshiba, NEC, Cirrus Logic, Sunplus, and Fujitsu.

DSP Segmentation by Application

By end market, 75% of all DSP revenue is derived from the wireless market,
both from handsets and base-stations. Six percent is derived from the consumer
market, primarily for portables such as digital cameras, camcorders, and MP3
players as well as high-end consumer devices such as DVD recorders; 5% sell
into wireline, mostly broadband modems; 4% into computing applications; and
3% is derived from the automotive market.

Disclosure: The author’s fund currently holds no position in any of the companies mentioned here. That may change at any time. 

Please see our Disclaimer HERE.

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Zack Miller is the lead equity analyst for America Israel Investment Associates, LLC. and a former equity analyst for a leading multinational hedge fund. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email zack@profile-financial.com

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