Magic, Hitachi Software negotiating comprehensive strategic agreement

Hitachi Software Engineering will market Magic Software Enterprises' integration tools.

Magic Software Enterprises (Nasdaq: MGIC; TASE: MGIC) is in advanced negotiations with Hitachi (NYSE:HIT; TSE:650) subsidiary Hitachi Software Engineering Co. Ltd. (TSE:9694) for a comprehensive strategic agreement. Under the agreement, Hitachi Software will market and install Magic Software's new integration tool family, iBOLT, launched 18 months ago. Hitachi Software has a sales turnover of $2 billion, and has 9,000 employees.

Magic Software chairman David Assia and CEO Menachem Hasfari reached an advanced stage in negotiations with Hitachi Software heads in Tokyo yesterday. Assia told "Globes" that Japan now accounted for 20% of Magic Software's activity, a larger proportion than its business in Israel, amounting to $14 million last year.

In Japan, Magic Software sells software development tools, and partners 800 software houses that use its tools to develop applications for end-users. Magic Software's branch in Japan has 50 employees, 49 of whom are Japanese.

Hasfari told "Globes" that the negotiations with Hitachi Software had been going on for a year, and would be closed in a few months. He said, "The Japanese won't buy technology from you without personally knowing your CEO. The Japanese are more interested in who you are than in your technology. The human factor includes information about the company's executives, their seniority in the company, whether you display stability, and what the company's business ethics are."

Hasfari added, "Japan's high-tech industry, unlike America and Europe's, is not enthusiastic about brilliant young men, but seeks business solidity, even regarding the most innovative technologies."

Following many meetings with Hitachi Software staff over the past year, Hasfari said, "In Japanese eyes, the leader of a company should be an older, very experienced, man who displays business maturity, soundness, and many years of experience." He added that several months ago, he thought a contract was close to being closed, after he was invited to Hitachi's private house in Atami, near Mt. Fuji.

Published by Globes [online], Israel business news - - on April 13, 2005

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