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1. Moody’s Investors Service has upgraded Israel’s credit rating from A2 to A1, the highest since 1948, reflecting the growing confidence in the long-term viability of Israel’s economy, and its capability to withstand global and regional economic, political and security uncertainties. Moody’s follows in the footsteps of Fitch and Standard & Poor, who have upgraded Israel’s credit rating to A+ (equal to A1) earlier in 2008 (Ynet, April 17, 2008).
2. IBM’s third acquisition of an Israeli company in 2008 (The Marker, April 18, 2008): Diligent ($165MN), following FilesX ($80MN) and XIV ($250MN). Symantec acquired Israel’s AppStream for $55MN (Globes, April 17). GE Healthcare acquired Israel’s VersaMed for $40MN (Globes, March 28).
3. Japan’s SBI led a $27MN round by Israel’s Quark Pharma (Globes, April 9). Meritech Capital led a $20MN 4th round by Israel’s Imperva, joined by Accel Partners, Greylock Partners and US Ventures (Globes, April 9). Sequoia, Bessmer and Lehman Bros invested $19MN in a 3rd round by Israel’s StoreWize (The Marker, April 10). Draper, Fisher Jurvetson (DFJ) co-led a $12MN 1st round of private placement by Israel’s Siklu. Argonut VC fund participated as well (The Marker, April 17). Sequoia, TL Ventures and ABS Venture invested $8MN in Israel’s ScaleMP (The Marker, April 3).
4. HP has followed in the footsteps of Microsoft, IBM, EMC and SAP, establishing its International Technology District (ITD), which examines potential joint ventures with Israel’s high tech industries. This is the first ITD of HP, which has invested some $6BN in acquiring Israeli companies (Mercury, Scitex Vision, Indigo and Noor Microprinters (Globes April 15).
5. London Economist, April 3, 2008: “For a country with so many wars, Israel still has an economy with the power to astonish…despite the costs of the 2005 Gaza pull-out and the 2006 Lebanon War. Israel has spent years peeling back layers of its once-socialist economy…It now has the most NASDAQ-listed companies after Canada and the US. More recently privatizations, pension reforms and deregulation have contributed their bit… A capital-markets reform in 2005 reduced the banks’ dominance and boosted national savings. The government has introduced commercial budget-management systems, put a 1.7% cap on budget growth and committed itself to gradual cuts in taxes, thus providing a cushion against Israel’s chronic political instability… Businesses have confidence that even if the leaders change, basic policy doesn’t. Last year Israel was invited to join the Organization for Economic Cooperation and Development (OECD), official confirmation of its status as a developed country… Global technology giants such as Intel have long been putting advanced production facilities like chip-wafer fabrication plants in Israel… Israel leads the world in R&D spending as a proportion of GDP, but this is heavily concentrated in high-tech. In more traditional industries the rate is just a quarter of America’s… The proportion of the population in the labor market is 56%, considerably lower than in America, though almost the same as in the first 15 European Union members…The country’s bureaucrats still have a lot of catching up to do… Credit and investor protection are excellent, but bureaucracy is overweening…The unions’ powers of disruption are another socialist legacy…Today unions are far weaker, but still hold a lot of sway in the public sector, ports, airports and other essential services, all suffer periodic strikes…Israel’s income inequality has also climbed steadily to reach one of the highest levels in the developed world…Public sector debt, which reached over 100% of GDP in 2003, is still a hefty 80% today…”