Even flagships need talented captains

Efi Arazi founded the first real Israeli high-tech firm 40 years ago. It was called Scitex and it revolutionized printing with its computerized graphical system for preprint processes. At its peak, Scitex employed 4,000 people. Many of those who passed through Scitex became entrepreneurs themselves and established their own high-tech companies.

But in the mid-1990s, as a result of the personal computer revolution, Scitex began its decline. It racked up losses, sold off subsidiaries, operations and assets - and after some 10 years all that remained was a stock market shell filled with cash. Now Scitex is called Scailex. Ilan Ben-Dov controls its kitty, which he used to make a leveraged takeover of cellular operator Partner. This is as far from Arazi's vision as east is from west.

Koor was founded by the Histadrut federation of laborers, back when the state was founded. It became an industrial giant. Incompetent management reduced Koor into crisis in the 1980s. During the 1990s Koor went through an impressive process of rehabilitation under the management of Benny Gaon, who rebuilt Koor and even led it to float on the New York Stock Exchange. Then Koor, too, started to change hands. First the Disney family took control, and after that Charles Bronfman and Jonathan Kolber, until finally Nochi Dankner bought it five years ago. Now its only significant industrial asset is Makhteshim Agan.

Koor's second main asset is its roughly 3% stake in Swiss bank Credit Suisse. Koor today is mostly an option on the Swiss banking industry, and is also an option on Dankner's instincts, skills and luck.

At the end of the 1980s there was a successful Israeli medical equipment company, Elscint, which developed and manufactured advanced medical imaging technology. Elscint was controlled by Elron Electronic Industries, whose founder Uzia Galil was considered one of the founding fathers of the Israeli high-tech industry. Over the years Elscint began to lose its competitive edge, and its controlling owner, Elron, which owned it by way of its Elbit Medical Imaging subsidiary, lost interest in Elscint and prefered to sell it. Even Elron, which was considered a local high-tech flagship in its own right, ran into financial trouble, stranding it far from its better days.

After the sale, Elbit Medical Imaging was turned into a cash-filled stock market vehicle, and caught the eye of real estate tycoon Motti Zisser. Zisser was interested in the attractive kitty of cash, which he used to leverage the construction of a long list of malls and shopping centers in Eastern Europe. Elbit Medical Imaging may still have its "medical" fig leaf in the form of imaging firm InSightec, but in reality Elbit can be viewed as a sort of option on Zisser's real estate development projects in Europe and Asia.

The three companies mentioned so far are still in the TA-100 index. Gaon, Arazi and Galil - and even more than all of them, Eli Hurvitz, who announced his retirement yesterday as chairman of Teva - would all clearly become of Israeli business legends in their lifetimes.

Now Teva is the flagship of the entire Israeli stock market. It is hard to quantify the responsibility of the man who retired yesterday and it is also hard to evaluate if his successor Phillip Frost is up to filling Hurvitz's shoes. But Scitex, Elron and others testify that flagships need talented leaders with vision to continue to carry the flag. (Ami Ginsburg)