"ECI needs a serious US marketing company. We’re talking about a $500-700 million deal," the company’s deputy general manager for finance Doron Inbar told "Globes" today.
Inbar raised the point in response to a question from "Globes" about ECI’s attempts to establish its status in he ADSL field, possibly by acquiring US company Pairgain Technologies..
Inbar said, "The high technological standard of ECI’s products justifies heavier, strategic penetration into the US than we have managed so far. Not that we have not succeeded in the US, we have sales of millions of dollars there, but still, the very fact that the US accounts for 25% of ECI’s sales shows we have t improve there. For the sake of comparison, Europe accounts for 52% of sales.
"The way to enter the US is via a serious US marketing company, that will give a massive marketing capability in the US. There’s no doubt that the candidates are marketing companies with development capability, not giant companies - and there aren’t many of those. I can estimate that we’re talking about a deal of the order of $500-700 million. I reckon it will be a share swap deal, but a share and cash combination is also possible."
Inbar denied the claim that ECI’s most important product, DCME (a voice compression product), was a milk cow of which the udders had almost run dry. "In the last few years, we have achieved a number of breakthroughs in this area, mainly in the cellular niche," he said. This is a fast growing field. A cellular product is presently capable of 1 to 4 compression. Cellular companies generally do not have their own communications lines, and have to lease lines. Our product enables them to lease only a quarter of the lines they would normally hire, which means a huge saving."
Regarding the merger with Tadiran, Inbar said, "The further in we get, the more we see tat it was super correct for both companies. There are a number of segments, or product lines, in Tadiran very similar in terms of culture, concept, and approach to those of ECI. Both in wireless and in certain parts of their access equipment activity, they think and act in very similar ways to ECI."
Published by Israel's Business Arena on January 20, 1999