So you thought that you did great work and you are due to get a big pay raise? Well, think again. According to a report by the The Manufacturers Association of Israel, there is a good chance that your employer is about to cancel any potential pay raise. In an article in Globes: “46% of industrial companies have canceled employee pay hikes planned for 2009, and 40% of companies have canceled bonuses, according to a new survey by the Manufacturers Association of Israel of 50 companies. The firms surveyed ranged from small to large, and included all manufacturing sectors.”

This is just more evidence that the Israeli economic growth has come to a standstill, and the outlook is not all that hot. The good news is that companies are taking these cost cutting steps before things get really bad. What that means is that when things recover, and yes they will recover- this is not the end of the world, Israeli firms will be much more trim and agile and be ready to aggressively gain market share.

Please see our Disclaimer HERE.

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.

Share with others:

Stanley Fischer, Governor of the Bank of Israel, spoke yesterday on the stability of the Israeli banking system. Fischer, along with many other public figures has gone out of his way to keep telling the public that the local banking system is sound. While scaring the public about bank failures is irresponsible, don’t Israelis deserve to be told the truth about what is going on? How about a little honesty from our leaders.

If everything is so rosy, then why does the BOI have a plan to stream money to the local banks in the event of a credit freeze? Is this prudent planning, or cause for worry?

As reported in Globes, Fischer spoke about how disciplined the local Israeli banks have been. “In addition, Israel’s banks had no sub-prime exposure. “Israel’s banks said ‘No’ to this paper,” said Fischer.”

Really? That’s not how I remember it. Bank in March Bank Hapoalim wrote off hundreds of millions of dollars. According to Reuters, “Hapoalim, whose shares have slid some 30 percent so far in 2008, said it posted impairments of 1.18 billion shekels, or $334 million, for its U.S. asset-backed securities portfolio. It had previously said it would write off around $300 million in the fourth quarter due to a decline in the value of its U.S. structured investment vehicle (SIV) holdings.” Other local banks also wrote off smaller amounts.

In the aforementioned Globes article Fischer also said, “Also the banks applied responsible credit policies.” Really? Is loaning money to the wealthiest ten families so that they can spend billions of dollars on international real estate, at the height of the real estate bubble, called responsible lending?

Shouldn’t the central bank head come clean with the Israeli public?

Please see our Disclaimer HERE.

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.

Share with others:

After sporting a strong earnings report, NDS Group (NNDS) announced that they have raised their offer to take the company private. According to Business Wire: ” … that the independent committee of its board of directors has reached an agreement in principle with News Corporation and two subsidiaries of funds advised by Permira Advisers LLP on a price at which News Corporation and the Permira entities would acquire all issued and outstanding NDS Series A ordinary shares, including those represented by American Depositary Shares traded on NASDAQ, for per share consideration of $63 in cash. The consummation of the transaction would result in NDS ceasing to be a public company, and the Permira entities and News Corporation owning approximately 51% and 49% of NDS, respectively.”

The deal is subject to approval from a host of regulators, shareholders, etc. Initially the deal was to be at $60/share, but with the company producing strong results, they received and opinion from Citigroup Capital Markets (C) who recommended $63 as a fair price.

We wrote back in July how we thought this may be a new trend, taking public companies private. Check out that post, here. The difference in the NDS case is that they are a company who continue to produce stellar results and whose share price has held up, not dropped by 80% like other companies.

Disclosure: Author’s fund has a position in NNDS. He has no position in any other stock mentioned as of 8/05/08.

Please see our Disclaimer HERE.

NEW! Introducing Israel Opportunity Investor, our monthly subscription-only newsletter. Stay ahead of the game and make smart decisions in Israel stocks. Go here to learn more.

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.

Share with others:

Israeli CRM and billing systems company Amdocs (DOX) has bested analyst estimates and come through with a record quarter. The company reported record revenue of $820 million in Q2, up 15% over Q2 ‘07, solidly beating the consensus estimate of $811.06 million. Non-GAAP net profit grew 9.9% to $132.5 million, or $0.61 per share, above the analysts’ consensus of $0.60. In addition, Amdocs raised Q3 guidance as well.

Globes quotes from a Merrill Lynch report on the earnings: “We attribute the strong performance to the first complete quarter of AT&T (T) revenue recognition and better than expected execution at Sprint (S). This is the second consecutive quarter that management has raised guidance while other telecom-exposed names have been much more conservative. We note that the company has a backlog of $2.42 billion, providing management good visibility into the next few quarters.”

Merrill put a $43 target on the stock, a huge premium to the $28-29 range the stock is trading in. The company seems to really be hitting on all cylinders and with another increase in guidance, once rationale comes back into the market, Amdocs potentially could hit the Merrill target.

Aaron Katsman, IsraelNewsletter.com

Disclosure: Author’s fund has a position in DOX. He has no positions in any other stock mentioned as of 7/24/08.

Please see our Disclaimer HERE.

NEW! Introducing Israel Opportunity Investor, our monthly subscription-only newsletter. Stay ahead of the game and make smart decisions in Israel stocks. Go here to learn more.

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.

Share with others: