(Nasdaq:ELBT) lost $2.4 million in the first quarter of 2001, compared with a profit of $16.3 million in the parallel quarter in 2000. Its loss per share came to 11 cents, compared with a profit of 74 cents in the first quarter of 2000.
Valued at $130 million, most of Elbit's revenues come from the sale of its stake in its portfolio companies. Elbit is owned by
But Elbit President and CEO Yigal Baruchi says that it's wrong to judge a holding company by its quarterly results. "The basis for evaluation should be Elbit's past exits, and it has been successful in that respect," he said.
Baruchi pointed out that Elbit is not an operating company, and that its first quarter loss is no cause for concern. He said that in light of the expected mergers in the IDB group, and based on Elbit's past results, Elbit's existence is justified.
Elbit posted capital gains of $68 million generated by the sale of HyNEX to
(Nasdaq:CSCO) in the third quarter of 2000. In addition, Elbit sold Peach Networks for $43 million to
(Nasdaq:MSFT) in the first quarter of 2000. Based on its exits to date, Elbit can certainly be proud, both in terms of the actual volumes of capital, and in terms of the prestigious firms with which it does business.
Elbit's revenues in the first quarter of 2001 came to no more than $900,000, compared with $28 million in the comparable quarter in 2000. The big gap is due to Elbit's sale of its 57% stake in Peach Networks.
Elbit wrote off $1 million in the first quarter due to the amortization of its holdings in Cisco. In the first quarter of 2000, amortized holdings came to $274,000. Meanwhile, the firm has $45 million in cash, out of its $81 million in assets.
Elbit, which has a 53% stake in
(EVS) is to sell 43% of its share to Altro Warenhandels, which is owned by its CEO Nir Alon. Elbit will receive $3.5 million in exchange for its share, and Alon will commit to investing $3 million in EVS.
The deal is being transacted in two stages. During the first stage, which was carried out in the first quarter of 2001, Elbit sold 27% of EVS for $2 million to the Alon family. This generated $1.5 million in capital gains for Elbit. At the end of this stage, Alon pledged to invest $1.5 million in EVS.
During the second stage Elbit is to sell Alon another 17% in exchange for $1.5 million. and Alon is to invest another $1.5 million in EVS. Once the deal is complete, Elbit will own 10% of EVS, and Alon will own 56%.
EVS manufactures automatic systems for visual inspection of the web. The company's sales came to $2 million in the first quarter of 2001, and its net loss came to $600,000, compared with its loss of $1.4 million in the first quarter of 2000.
Elbit sold its share of EVS as part of its effort to re-align its investment holdings. As stated in its reports, Elbit is looking to concentrate its investments in the e-business and m-commerce sectors. To this end, Elbit invested $2 million in
, which specializes in solutions for the transfer of data on cellular phones. In return for its investment, Elbit received a 45% interest in CellAct.
Elbit also invested in
, which develops solutions for wireless communications. The company has developed a modem that connects mobile PCs to the Web via the code division multiple access (CDMA) network. Elbit is to invest $4.5 million in Cell Data: $3 million by the end of 2001, and $1.5 million during the course of 2002.
One of Elbit's notable investments is its 12% stake in cellular company
(Nasdaq, LSE:PTNR). Elbit's holding in Partner is via affiliated companies.