Last week we saw what really bothers the Americans. They don't care about either nuclear testing or procrastinated pullbacks. What worries them is the crash of the yen, which on Monday sent the DOW Jones tumbling 200 points, while threatening stock markets the world over. Alarmed by the fall of the Japanese currency, the Americans promptly staged an impressive, indeed surprising rescue campaign, including the injection of billions of dollars with which to purchase yens. For the present, it's working.
The US stock market is still in a mode of nervous volatility. As I see it, not before the second quarter results are published in mid-July will we know whether we are dealing with hysterical bargains or with prices that reflect corporate business difficulties.
As part of the process of examining companies whose share price is at rock bottom, I went last week to listen to Dr. Shimon Eckhouse, CEO of ESC Medical Systems (ESCMF), who was presenting the company at a convention initiated by Oppenheimer Investment Bank. Oppenheimer recently issued a "strong buy" recommendation for the ESC share. It was very encouraging to hear that Dr. Eckhouse, despite being a technological entrepreneur and scientist, is presently focusing on the most important things, namely marketing, marketing, and, thirdly, marketing.
ESC, expanded as a result of acquiring Laser Technologies and Luxor of the USA, has optimal world-wide deployment with more than eighty salespersons and forty distributors. The company offers some twelve types of medical machines, based on laser and light technology, designed for cosmetic and aesthetic treatments.
The sales and profits engine, which I believe will take many people by surprise when the results of the current quarter are published, is depilatory devices. The company controls half of this market, which has doubled and tripled itself over the year. It shows in the market with four different hair removal systems, contriving to comply in full with the requirements of medical institutes and physicians.
In addition, the company is having great success in selling its product range for treating varicose veins,
the Epilight™ Hair Removal System, the PhotoDerm® VL for benign vascular lesions and the PhotoDerm® PL for pigmented lesions and tattoos, as well as the NovaPulse, the Derma™ 20 , the Topaz™ 30 and the LX 20 lasers
for a variety of clinical and dermatological applications, all of which are marketed internationally. In addition, ESC markets the Silhouette™ Liponic Sculpting System and the VersaLight® for skin tumours.
| |
Cumulative Yield* |
Weekly Yield |
| Shlomi Cohen |
+22.11% |
+0.24% |
| Omer Shvili |
+19.65% |
-1.23% |
| NASDAQ |
+13.03% |
+2.00% |
Cumulative Yield calculated from January 23, 1998
ESC also has other products for use in medical treatments and laser surgery. That is not all. Eckhouse revealed that ESC is presently working on the development of a product for treating psoriasis. Success in that direction will gain the company access to an enormous market, where it will meet no competition, with the possible exception of a stay at the Dead Sea.
The US population, principal market for the ESC aesthetics products, is an ageing one, which wants to go on looking good, and can afford to pay for that costly pleasure. ESC's prosperity is undoubtedly attributable to the well known trinity of a rapidly growing market, excellent products and a high standard of management.
The VocalTec (VOCLF) share price in the past week recouped two dollars following continuous erosion. Confusion, in this instance, started with the recommendation given by the analyst of NetSpeak, VocalTec's competitor, which hovered somewhere in the vicinity of $33. When that analyst saw NetSpeak fall $13, he decided that the whole Internet telephony field was in trouble, and issued an all-sector warning, which seriously injured VocalTec. In the second half year, due to commence shortly, I believe we will hear of positive developments in VocalTec, deriving from its connections with Deutsche Telekom, ECI and other companies.
On Friday, Aurec floated its shares on the New York stock exchange under the less known name of Amdocs. We thus obtained fresh representation in a very respectable category of companies with a market value approximating $3 billion. All I can tell you about the company and its business is that I know more about Israel's General Security Service than I do about Amdocs. Analysts reviewing the company are in for some hard work.
The communications equipment manufacturing sector is still red hot, after Canada's Nortel, partner in Telrad, announced its acquisition of Bay Networks, through a $9 billion share swap. Sweden's Ericsson announced last weekend that it is examining three companies in this sector, with a view to possibly acquiring them. On Wall Street, somebody also mentioned Comverse as a candidate for acquisition. There were others, on Friday, who named Orckit's competitor, PairGain Technologies, as a sure candidate for take-over. Last year, incidentally, ECI was about to merge with PairGain. In short, it's an exciting scene.
Under market conditions as difficult as today's, a little modesty does no harm. If one's options secure a 23% yield in a week, one says thank-you and gets out. That is what I am doing with my Orbotech options, even though the share price is very far from its full value.
Published by Israel's Business Arena June 22, 1998
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