Zack Miller
IsraelNewsletter.com

It’s great when you read about your own service provider going public. It’s a tremendous feeling of accomplishment as a consumer when you think your well-spent dollars have helped propel your ISP into the big leagues. So I read with excitement today that my ISP, 012 Smile.Communications (SMLC) is gearing up for an IPO this week.

SeekingAlpha has a short write up on the IPO.  I love Smile’s service — I love their logo (cure little smiley a la Incredimail (MAIL)).  At first blush, I don’t love the IPO.  40% yoy revenue growth off the back of a 60% rise in cost of revenues.  Not a particularly jiggy biz in my mind.

In fact, it hearkens to the same discussion we’ve raised before at IsraelNewsletter.com about the interest in investing in native Israeli service providers: where’s the growth?  Read Aaron “Buy Everything” Katsman’s write up on Israeli cellular leader: Cellcom (CEL).  Aaron’s pretty tough on CEL and explains that growth is going to eventually have to come from international expansion.   The same will probably hold true for SMLC.

I’m reserving my smile for now on 012 Smile.Communication’s IPO.  Let’s watch how the market receives the new offering.

Disclosure: Author’s fund has no position in any stock mentioned as of 10/28/2007.

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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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