There have been no clear numbers about ECI Telecom Ltd. since it was taken over and delisted in late 2007. There are no clear reports about its workforce, and no executive or controlling shareholder talks openly or clearly about strategy. Even trivial matters like its directors are enshrouded in fog. Chairman Rafi Maor has left the company to take over the chairmanship of Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1)
Ostensibly, this is not a problem for a private company. No one has yet to regret about saying nothing to the media or about mentioning a number that it would prefer not be disclosed, but times have changed. For example, reports in the past few years about a potential sale of ECI to Russians damaged the company's reputation among its main customers. When sensitive solutions for sensitive customers are on the line, is it possible to trust a company that one day soon might be a unit of a structure partly owned by the Russian government?
ECI has achieved a position that scores of Israeli high-tech companies strive to reach. It is a large company, with hundreds of millions in annual sales, thousands of employees in Israel and other countries, and leading telecommunications carriers among it customers. So why doesn’t this work?
Despite ECI's inability to adapt to changes in telecommunications, the company is in relative good shape compared with the mid-2000s. Years back, when glimpses were possible into the company's books, it was clear that it was struggling to keep its finger on the pulse and grow.
The Chinese conquest of the telecommunications equipment industry has undercut many companies. ECI has been trying for some time to go back to the future, develop state-of-the-art solutions, recruit employees with the right skills, and strengthen its cash flow. With determined enough shareholders, this is possible, but the price will be high. Mass layoffs and the higher hiring of employees in new fields have never been enough.
There is not enough information about what is going on at ECI to try and describe the dilemmas facing its executives. But, given the dynamics in the market in the past few years which have left the corpses of other companies by the wayside, ECI will have to invest heavily to get back on its feet. We will not be surprised to soon hear about a large investment in the company, and even then a miracle will be needed for the latest round of layoffs to be the last.
Published by Globes [online], Israel business news - www.globes-online.com - on September 15, 2013
© Copyright of Globes Publisher Itonut (1983) Ltd. 2013