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Technology Stocks : Check Point Software (CHKP) -- Ignore unavailable to you. Want to Upgrade?

To: Philip H. Lee who wrote (1723)	2/26/1998 11:43:00 PM
From: P.M.Freedman	Read Replies (1) \| Respond to of 7150

Thursday , Feb 26, 1998 Sun-Thu at 18:00 (GMT+3) High Tech Managers Tools for Thinking Big By Nir Barkat, BRM President and CEO Major changes are about to overtake Israel's high-tech industry. The most important of these is the process I call the "shrinkage" or "condensation" of the life expectancy of start-up companies. A company wanting to join the "big league" will have to deploy very rapidly, recruit people quickly, and arrive with a ready-made model so as not to get stuck at the market threshold. To support this process, much more money will be required than in the past. What form does such shrinkage take? The time, for instance, required for CheckPoint to evolve from a mere idea to a proper company, with branches world-wide, and to construct a strong management backbone apart from the entrepreneurs themselves, was almost two years. BackWeb will already need to complete the process within eighteen months, and Highway must be on its feet within a year. A second example is money. When CheckPoint was established, a mere $400,000 was needed in the first year. BackWeb has so far raised $20 million and will evidently need another $10 million before issuance. It is important to note that the examples relate only to companies that are thinking big, and not the ones that are prepared to be content with just a market niche. When it comes to personnel, it will be all-out war. Companies will use aggressive tactics to recruit the best manpower the market has to offer, so that the key functions needed by a maturing company can be quickly manned. I think more start-ups will fail in the next two years, not even achieving partial success. Correspondingly, there will be a consolidation process, in which a number of small companies operating in the same field join forces to reduce costs and development time. Successful companies will be obliged to establish themselves in the United States. Israel is a good development incubator, but the company's management HQ should be located in the United States because there is no substitute for being close to the market. This process will also involve changes as regards employment and management, and socio-cultural changes, that are becoming technologically possible in the Internet age. The Internet and rapid communications channels will be basic to the change. There is even talk of an Internet State, with a government, and voting rights for the residents. In technological companies, communications today take the form of electronic mail rather than inter-personal encounters. Communications will replace roads, and the employment centre will be close to home. There has recently been a definite improvement in the quality of management in Israeli high-tech industry, due to evolutionary processes. The best survive, the others learn from them how to set up and manage a company. In this context, the BRM model relates mainly to the improvement in the managerial aspects of the companies in which it invests. Many people have said of BRM that all its success with CheckPoint was a matter of luck. Yuval (Rakabi, one of the partners), sometimes says "we have more luck than sense - and we are not stupid". Obviously, a bit of luck is useful, but luck sometimes needs to be helped. There is no dearth of examples of companies that had everything, an excellent product, a developing market and the right timing - but were unable to translate those conditions into a business success. The Chief Scientist's Office is also in need of a thoroughgoing change. We, for example, never go to the Scientist, because dealing with that office delays the product's arrival on the market. The industry today does not have a money problem. In my opinion, the Scientist should take 80% of its budget, and, instead of subsidising entrepreneurs, should invest the money in technological education for the population at all ages, elementary school, high school and university, so as to prepare future Israeli generations for the new age.

To: Philip H. Lee who wrote (1723)	3/20/1998 2:28:00 AM
From: Philip H. Lee	Respond to of 7150

Selling my CHKPF at the open tomorrow. Liquiding my position. This message is for fair disclosure purposes since I called CHKPF my favorite stock of the year on 1/1/98. Bay's recent purchase of Netsation, Cisco's continued efforts, and Network Associates explicit aim at CheckPoint - to have all three events in combination is not good news. The VPN market is also being opened up to serious competition against Checkpoint, based on my research. My capital is better deployed elsewhere. Good luck to all CHKPF investors. Philip Disclaimer: Invest at your own risk. Information provided for discussion purposes only. Do your own research. Information not guaranteed to be accurate.