NDS Group Is One of the Best Opportunities Around

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Includes: ALVR, NNDS, NWS, T
by: Shlomo Greenberg

For me, NDS Group (Nasdaq: NNDS) has always been one of the most interesting and promising Israeli companies traded in New York. There are several reasons behind the interest NDS has been arousing, all of which show it to be one of the best investments around.

First and foremost, this company has excellent and focused management that has chosen a niche in which it has a huge technological and business advantage. What is the source of NDS’s business advantage? It comes from the backing it receives from its parent company, the giant News Corp (NYSE: NWS), which competes for global media leadership, and quite successfully too.

NDS focuses primarily on the provision of technology platforms and accompanying applications for digital pay-TV services. The technology it offers includes conditional television content transfer, personalized information security, various video technologies, and solutions for interactive Pay-TV platforms. The company manufactures converters and auxiliary devices for information transfer using all modes of satellite transmission, from cellular and telephony to cable television networks. Digital TV and everything connected to it, is one the more interesting fields, with rich potential, and NDS controls, through News Corp, 35% of the digital technologies market for Pay-TV applications.

The key personality in this story is NDS executive director, chairman and CEO Dr. Abraham (Abe) Peled. Peled, who is also a member of the News Corp representative board, joined NDS from Elron Electronic Industries (Nasdaq: ELRN) in 1995. He holds bachelors and masters degrees in electrical engineering from the Technion Israel Institute of Technology, and completed a doctorate in digital signal processing at Princeton University. He worked at IBM from 1973 to 1994, reaching the rank of VP software and global development.

In 1993, he joined Elron as business development manager. Two years later he was asked to establish NDS, and jumped on the bandwagon, a decision that has clearly proved to be a successful one. Peled works together with COO Raffi Kesten, whom he brought to the company in 1996. Last year, the company appointed Alex Gersh, a graduate of Motorola Corporation (NYSE: MOT) and British Telecom, and a man with an extensive background in communications-related fields, as CFO.

These three, with the support of a strong board of directors with vast business experience, are leading NDS from one success to the next. The last big move which placed NDS in a class above its competitors, was the acquisition by News Corp of DirecTV (DTV) several years ago. This placed NDS on the map on both Main Street and Wall Street, and brought it many institutional investors.

It looks to me like the second big move that will take NDS forward in the coming years is now underway. This too is being carried out in conjunction with News Corp and DirecTV. Last week, the captains of News Corp and DirecTV, Rupert Murdoch, Peter Chermin and Chase Carey announced the setting up of a national WiMAX network that would be connected to DirecTV’s systems in the US.

The network will be managed by DirecTV manager and former News Corp COO Chase Carey, a man considered to be the top manager in information transmission and media field. News Corp and DirecTV will make a massive investment ($2 billion) that will enable satellite to compete with the cable television and telephony companies. NDS will, no doubt, be one of the big beneficiaries, since it already develops technologies for securing transmission over WiMAX networks.

I would be very interested to know if Alvarion (Nasdaq: ALVR) is in any way connected to this. Talking of Alvarion, there can be no doubt that it did the right thing when it pushed forward the WiMAX technology, effectively becoming the pioneer in this field. The big question now is whether Alvarion will the one to profit the most from its initiative, or whether some other company will get lucky instead.

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.

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