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When Avihu Ben-Nun visited San Diego this August to help establish the Israeli company, Disk Ltd., it was a return visit to one of his favorite cities. In the late 1960s, Ben-Nun was a popular guest lecturer at the Navy Fighter Weapons School, which at the time was based at Miramar. He was a pilot in the Israeli Air Force, and his stories of leading the air attacks against Egypt that gave Israel supremacy in the Six Day War were useful to the American fighter pilots.
Now retired as commander of the Israeli Air Force, Ben-Nun has many San Diego friends from his military days, including media mogul Dan McKinnon and U.S. Rep. Randy Cunningham.
Since his retirement, Ben-Nun has turned his attention to business. He serves as chairman of several companies, including Universal Motors Israel, which is partially owned by General Motors, and Disk Software, which recently set up U.S. operations on High Bluff Drive in Carmel Del Mar.
Disk Software was established in 1994 by a group of Israeli citizens, many of them former air force officers, to help emerging high-tech companies in Israel get off the ground.
"We are looking always for solutions that are unique, in an area where there are few competitors and where a need is well-established," Ben-Nun says. "Some of these are (Israeli) military spin-offs, and some come from Russian scientists who came to Israel in the last decade and brought to Israel technology useful in the defense area. Many of these technologies have civilian applications."
Ben-Nun says most of the Israeli companies Disk Software works with are at the start-up stage, even too green for venture capital. Disk helps the companies perfect their software, study markets, develop a business plan and manage production. While Israeli companies are strong on trained technologists, explains Ben-Nun, they often lack the capital, customers and experienced management necessary to thrive overseas.
When the start-ups are far enough along, Disk's San Diego office will bring the young companies to the United States in search of both broader markets and larger pools of investment capital.
"Israel is a small market," says Ben-Nun. "We’re going to a market that justifies the investment being made."
Some of the companies may even go public in the United States, but Ben-Nun cautions that he is seeking "angel" investors, or those with the financial resources and risk tolerance to invest at a very early stage of development. Usually there can be little assurance that the companies will produce an investment return, or a clear idea of how long it will take the profit to materialize.
Disk Software previously had done some business in Atlanta and surveyed the Silicon Valley area, but decided to locate in San Diego because of the area's image as an emerging technology center. The perception exists that companies in Silicon Valley are overpriced, but investors see San Diego companies as better values, says Ben-Nun.
The first company developed and managed by Disk was Exactium, a provider of interactive selling solutions. Exactium was acquired in 1998 by a publicly traded Swedish company, Industrial and Financial services.
Disk now has three start-ups under its wing. One of those companies, myITcorp, began shipping product in the United States last month. Mark Hellinger, who heads Disk's U.S. operations, says myITcorp software helps companies manage and monitor software programs that are being run on their networks. The information technology manager can know whether the software the company owns is being used to the best advantage, whether it should be upgraded, removed or the like. It also can figure out which employees are importing pirated software or playing too much solitaire, even if the employee renames the card game QuattroPro, or some other clever disguise.
Within the next year, Hellinger plans to launch an enterprise software company and a company that offers software for health care applications.
The Y2K Cash Machine
Those economists who are puzzled about why the U.S. employment levels are high and why the economy keeps rolling at such a healthy clip may have overlooked the Year 2000 effect. It could be that the economy has been stimulated by all the cash being spent to save us from Y2K breakdowns. The brokerage industry alone is spending more than $5 billion to fix millennium glitches. The stock exchanges have invested $100 million in a series of tests that simulate the calendar rolling over to the big round number.
The Forum for Financial Advice has studied the Y2K risk for investors and reports that disruptions should be minor, though some payments or other transactions could be temporarily delayed. There always is the chance that some financial reports could be miscalculated using the muddled actuarial tables. (But that possibility isn’t limited to Y2K, is it?) The Forum suggests a 19th-century solution to a 21st-century problem: Keep good paper records.
The biggest challenge for most banks and other financial institutions at year-end will be a stampede for cash. People may want folding money in anticipation of Y2K crashes, or perhaps because they are planning one heck of a New Year’s Eve party.
Whatever — even if the average U.S. household withdraws as little as $100 in extra cash, this translates into a total increased demand of $10 billion. Thinking ahead, the Federal Reserve plans to make an extra $50 billion in cash available to banks to make certain teller machines don’t run dry.
Stock Market Factoids
- The total value of all stocks and bonds available to U.S. investors is $15.4 trillion.
- Banks, insurance companies and mutual funds are major stock market players, but individual investors are not to be sniffed at. We hold nearly $7 trillion in stocks and bonds.
- Additionally, 77 million Americans own some $5.6 trillion worth of mutual fund shares.
- There are 3,114 companies listed on the New York Stock Exchange. In 1998, the average daily volume of shares traded was 673.6 million, valued at $7.317 billion. The NYSE is the world's largest stock exchange, but Nasdaq, the electronic marketplace, is in second place and catching up.
Janet Lowe is author of several investment books, including "Value Investing Made Easy" (McGraw Hill) and "Warren Buffett Speaks" (John Wiley & Sons).
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