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Formula is on the move. Israel’s leading Information Technology (IT) solutions provider, Formula Systems Ltd. has had an average annual international sales growth of 85 percent over the last five years and expects exports to total $200 million by the end of this year.
The largest publicly traded IT company in Israel, Formula expects sales to reach $400 million this year, up from $335 million in 1999. Its subsidiaries design, develop and implement innovative business-critical solutions for industries ranging from telecom to banking, manufacturing, defense, commerce and aviation. The group’s shares are traded on Nasdaq (FORTY) and on the TASE.
"We tap into the highly developed Israeli technology and export it," said Dan Goldstein, the group’s chairman and CEO. According to Goldstein, the group has two ways of ensuring it offers customers cutting edge technology – by developing technologies in-house, and through mergers and acquisitions.
"We acquire existing companies, start-ups and mature under-performing companies, and then leverage our ability to manage them," Goldstein said. "What distinguishes us from other conglomerates is that we focus solely on IT."
The group’s customers include international blue chip giants like Deutsche Bank, Ford Motors, MCI, MetLife, Pratt & Whitney, ABB, BMW, and Sony.
"Before the end of the year, we will probably start a second venture fund, raising much larger sum," Goldstein said.
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Formula actively encourages cooperation between its subsidiaries, which can transfer technology to one another, level human resources demands, combine skills for specific projects, and form a critical mass for large projects.
Cross-selling within the group is also encouraged. "If one Formula company has provided a satisfactory solution to a customer, other subsidiaries can more easily sell their solutions to that same customer," Goldstein explained.
"Formula’s management is staffed by IT veterans who have the gut feeling and business acumen needed to make the right decisions," Goldstein said, "from shunning an investment to choosing the right strategy and partners."
Goldstein expects four of Formula’s public subsidiaries to spur the group’s growth in coming years, with other subsidiaries following suit.
Crystal (NASDAQ: CRYS), a conversion house, provides Web enabling, software verification, platform migration, and Euro conversions.
ForSoft (NASDAQ: FORS) provides IT solutions for vertical industries.
Magic (NASDAQ: MGIC) provides e-commerce solutions, customer resource management (CRM) products, rapid application development (RAD) tools, and migration to a Linux environment.
Applicom, traded on the Tel Aviv Stock Exchange (TASE), provides Web technology solutions, implements CRM and enterprise resource planning (ERP), and develops products for international software vendors.
A fifth subsidiary Babylon.com, a multilingual translator for Internet users, is expected to become another high-growth company.
"Our main target for the coming years is to increase our global exposure," Goldstein said. Because Formula has gained world-wide recognition, introducing a company with the Formula logo carries some weight today. "In five years, I would like to see the group become a major global player in software solutions," Goldstein said. "We have a great technology base and a very creative and innovative work force. We have already created the marketing channels and reputation needed for further expansion, and we have gained the crucial experience needed to replicate the success we are now enjoying."