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June 14, 2006
Magic Software abandons CRM
(Israel Business Arena Via Thomson Dialog NewsEdge) Two years ago, Magic Software Enterprises Ltd. (Nasdaq: MGIC; TASE: MGIC) made a strategic decision to focus solely on technology, and not applications. In line with this strategy, the company yesterday announced a deal to sell its customer relations management (CRM) activity to eContact Software Ltd. for several million shekels, including NIS 1.3 million in cash, and the rest in eContact shares. Magic will own 6% of eContact following the sale.
eContact was founded by a group of investors from North America and the UK, most of whom came from Bizware, which was acquired by Marconi-UK. The senior partners in eContact are experts in the fields of CRM, cellular and telephony. The company bought Magic Software's eContact product, and is keeping the name in order to preserve continuity.
Magic Software Israel Udi Ertel said yesterday, We had an interesting opportunity, in which a certain investor was seeking a solution for the cellular market. This investor was looking for a solution similar to our eContact, so we offered to sell it. We all profit from this deal.
eContact plans to make extensive modifications in the acquired product lines, including conversion to an Internet system incorporating VoIP. The transaction also includes incorporating Magic Software's eService system, which specializes in providing service via the Internet.
Ertal said, The product has great market potential. There is heavy demand for it in many countries worldwide.
Globes: If the potential is so great, why don't you continue operating in this sector?
Ertal: We've long since been out of the CRM business. The product was bought from our partner, and Magic hasn't done anything with it for years, and stopped developing it. Our goal is for the company focus to be a software provider, and we're focusing on our flagship product, iBolt.
Magic Software has a market cap of $50 million. It posted a net loss of $169,000 on $15.3 million revenue for the first quarter of 2006.
Published by Globes [online], Israel business news - www.globes.co.il - on June 14, 2006
Copyright of Globes Publisher Itonut (1983) Ltd. 2006
(source: http://www.tmcnet.com/usubmit/-magic-software-abandons-crm-/2006/06/14/1683401.htm)
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