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With a new management team in place and a new technology focus, B.O.S. Better OnLine Sol. (Nasdaq: BOSC) looks ready to take its place in a competitive but fast-growing market.

More commonly by the acronym BOS,
B.O.S. Better OnLine Sol. is one of the oldest Israeli companies on Nasdaq. I discovered it back in 2004 because it had acquired a most interesting company by the name of Odem Technologies. I thought that the big breakthrough was just around the corner and the stock did indeed soar for a certain length of time, only to settle down again later. In actual fact, it has been marking time ever since the slump at the end of 2002, save for one sharp fall to $0.50 at the beginning of 2003 and two subsequent rallies to $4.50 at the end of 2003 and then $5 at the end of 2004.

Recently I noticed that the company announced its intention to make a rights offering and I also noticed that there have been a few changes at the helm. When a company raises capital through a rights offering and changes its management team, it usually means that something is afoot. It does not, obviously, guarantee anything, but the fact that a new president and CEO have been brought in, coupled with the willingness on the part of investors to pump more money into the company, shows that both shareholders and management believe that something good is on the cards. I always find such instances intriguing, so perhaps this would be an appropriate time to take a closer look at this company.

BOS develops solutions for the radio frequency identification [RFID] software and supply chain industries. What does RFID mean? It is a generic term used to denote a system that can transmit a radio signal containing the identity of a product, person, or any other item. There are several systems like these around, and they all come under the category known as Automatic Identification Technologies. This group includes some extremely sophisticated identification systems and some that are less complex, from simple barcode tags to identification technologies that verify identification by scanning the subject’s retina.

RFID was created in order to identify and transmit information without the need for human intervention. It consists of a chip with a minute antenna and a transceiver, which receives and transmits radio signals. The chip can store a vast quantity of information about the product on which it has been installed, from date of dispatch to weight - all the information needed to monitor the product, and then transmit it digitally to a computer through device called a reader.

This is not a new technology, but since the start of the new century it has been adopted by major companies as a means of identifying and tracking their products. One of the main forces behind the drive towards the adoption of RFID is the giant U.S. supermarket chain Wal-Mart (NYSE: WMT), which is not only tagging all its products with this technology but is also continuing to expand it further, aiming for supermarkets without check-out staff. The customer will fill up his trolley with products with RFID stags all of which will be scanned by readers. The total sum spent by the shopper will then be debited to his credit card or checking account without him having to pass through a check-out till.

So this a massive market, in which there is plenty of room for companies such as BOS to make their mark. The company’s new CEO Shmuel Koren took up his post three months ago, after serving for seven years as CFO at Visonic Ltd. The impression I got after meeting him was that this is someone who knows exactly where he is going, what the company’s goals should be and how to carry them out.

Koren represents a new generation of managers that have come into their own in recent years, so I think that the company looks interesting. I have always held the view that if the technology and marketing know-how are there, the prospects for the company (and, of course, the stock in turn) will be a lot better. As a first step, Koren cleaned the company of all the activity it engaged in on a small-scale, and he is now focusing on RFID systems for the business sector. As BOS has been around for some years, it has access to its historical customers and it is up to Koren and his team to persuade those customers to keep faith with the company.

Koren’s goal is to position BOS between RFID hardware manufacturers and major integrators such as IBM (NYSE:IBM) and Hewlett-Packard (NYSE:HPQ). This is a market that moves $500 million and which is growing rapidly. BOS, managed, for example, to gain a foothold in the livestock inspection and monitoring business. Ever since BSE decimated herds across the globe, all those engaged in the meat and dairy product business have to supervise and monitor every single animal in their herds. Farmers can maintain full supervision over each animal’s state of health through a tag that is stapled to its ear.

Currently headquartered in the Teradyon Industrial Park in Misgav in northern Israel, BOS is, quite rightly, moving to Rishon Lezion. Board chairman Edouard Cukierman, who joined in May 2003, is one of Israel’s most experienced investment bankers, so the Koren-Cukierman team can quite definitely look forward to success. In January Koren promoted Eyal Cohen, the BOS controller and a man with extensive experience and know-how, to CFO. The building of a new, aggressive management team is definitely a good sign but I would not be in a rush to buy the stock at present, principally because of the upcoming rights offering, which will probably keep the stock under pressure until it has been completed. From then on, everything will, of course, depend on developments, but Koren is optimistic and his optimism is rubbing off on others too, myself included.

BOSC 1-yr chart

BOSC

Published originally by Globes [online], Israel business news - www.globes.co.il
© Copyright of Globes Publisher Itonut (1983) Ltd. 2006. Republished on Seeking Alpha with full permission.

Source: B.O.S.: New Management Should Take It To The Next Level