The entire interview with Gemini’s Carmel Sofer is part of our new subscription newsletter, Israel Opportunity Investor. You can find out more about the product and the opportunities we cover at www.israelnewsletter.com. [More...]

The entire interview with Gemini’s Carmel Sofer is part of our new subscription newsletter, Israel Opportunity Investor. You can find out more about the product and the opportunities we cover at www.israelnewsletter.com.

Can you tell us a bit about Gemini?
Carmel Sofer, Partner: Gemini was one of Israel’s first VCs and is 15 years old. We now manage more than $600 million via 4 funds. We’ve just closed our 4th fund and are in the process of raising our 5th fund, which we’re targeting to be $200 million. We’ve had over 30 exits including Saifun and recently, Traiana.

What do you look at when you look at a prospective investment?
CS: We have three criteria that we look at when we meet with entrepreneurs. We’re focused on IT business. By that, we mean that we’re looking at companies that compete in enterprise software, consumer electronics, semiconductors, Internet, and mobile. We’re now also looking at Media companies, which we define to be TV infrastructure and advertising. We only invest in Israeli companies. By Israeli, we mean that either R&D should be located in Israel or that the founder, the entrepreneur, is Israeli. We’re finding good opportunities now with Israelis residing overseas. We invest in early stage companies. We’re the professionals in early stage investing in Israel. Entrepreneurs walk into our door with a slideshow presentation and we work together with them to build a large business. We’re now working with some of the best entrepreneurs in Israel. Out of the twenty portfolio companies in our fourth fund, nine of these companies are lead by serial entrepreneurs working on their second and sometimes, even third companies. We’ve recently invested in new companies started by Dov Moran who founded Msystems and Amir Ashkenazi of Shopping.com.

How big are your typical investment rounds?
CS: Every investment is different but typically, our seed rounds are $500,000 and A rounds are $3-5 million.

Do you continue to invest alongside your portfolio companies as they grow?
CS: That’s a good question. Many early stage investors pour money in at the beginning and watch and see what happens. We continue to work and invest alongside our companies as they grow. We have to believe that our companies are going to be very big companies and by that, I mean $1 billion companies. Of course, forecasting a billion dollars of potential in an early stage company is tough, but if we can’t get there, we won’t invest. We recently had two companies come to us with good models and good leaders. We only foresaw exists of about $150 million. This number was corroborated by some other VCs. We passed on both deals while other VCs funded both deals.

Do you see any significant trends in Israel right now?
CS: We were some of the earliest to spot a key trend we see playing out right now: the return of successful entrepreneurs. We’re seeing serial founders of startups rebound off successful exits and with money in pocket, begin building new businesses. We’re seeing more and more of this caliber of professional starting new companies. They’re not necessarily interested in the money. They have a strong commitment to building a company and they’re coming from a variety of different fields. In our 4th fund, we have nine companies of this type and interestingly enough, most of their first ventures were funded by VC firms other than Gemini.

Why are these serial entrepreneurs turning to you and your team?
CS: I think it’s for a couple of reasons. They value our professionalism. They like the prospect of working together with us. They value our experience both in the investment process and on the other side of the table. We come from an operational background with a focus on running businesses.

Can you tell us about some of your portfolio companies?
CS: Massive Impact is headquartered in Taipei with R&D in Israel. The founder, Sephi Shapira, is a young Israeli who’s lived in Taiwan for years with his family. His first company sells ringtones and funtones to mobile customers via relationships with the network operators in Asia Pacific. Massive Impact was born from an idea that started while building his first firm. The company enables direct marketing via the mobile phone with an extremely high response rate via a statistical engine that targets the optimal population to receive a client’s message. Massive Atack monetizes its service via a payper-call function to tie together the consumer with the advertiser. The company is already operational and producing revenues in Taiwan, Hong Kong, Thailand and China. We’ve also invested in a company called PrimeSense. This startup was created by very young gamers. They found that the user interface (UI) for gaming wasn’t great. They developed on an idea to create a 3D camera at the price of a webcam to enable gamers to operate games by using body gestures. They employ a unique, local design that enables this 3D camera. If you know the Nintendo Wii, the gaming console employs a 2D camera and requires you to hold the device in your hand. There are lots of applications for gaming as well as for training (skiing, dancing, etc.). We’re very happy with the progress of this company and they’ve recently attracted an ex-Managing Director of DSPG Group (Nasdaq: DSPG) to join them in building out their company. They’re in negotiations with top tier players. Another company we have recently invested in is called Intercast Networks. Professor Yechiam Yemini from Columbia University founded this company. He’s the ex-brother-in-law to Kobi Alexander and founded Comverse (OTC: CMVT.pk) and was the co-founder of SMARTS, acquired by EMC for $206M. On his new venture, he could have taken an investment from anyone. Intercast “overlays a software and switching infrastructure over the Internet to allow TV quality distribution of content to a mass audience at a low cost.” Essentially, he’s enabling a broadcasting mechanism, multicasting, on the Internet. It’s an end-to-end solution. The content provider will be one type of customer while the network providers will be another. Network providers can offer their customers IPTV without investing
in a huge infrastructure.

Isn’t this what Akamai (Nasdaq:AKAM) proposed to do?
CS: It’s similar. But, in order to cover the U.S. with their service, Akamai needs something like 10,000 servers. Intercast needs 10 servers and some switches. After years of focusing on enterprise technologies, we’re hearing from other VCs that Israelis are beginning to hit their stride with startups developing consumer-facing technologies.

Do you see this trend?
CS: Definitely. We’re seeing more people thinking about consumer plays. It’s really 3 phenomena. Internet: We are seeing a lot of entrepreneurs focusing on Internet plays. While many of the startups in this crowded space are clustered around few ideas, we’re seeing some really different type of companies being founded here in Israel. Consumer play: Dov Moran’s new firm, Modu, of which Gemini is an investor, has the potential to be a multi billion dollar company. Gemini was one of the first to invest in consumer technologies. Business terms, not just technology: We’re witnessing the maturation of the Israeli start-up. Years ago, companies were very much technology-focused. Leaders are beginning to recognize the value in sales and marketing and this has changed the requirements of those who are building start-ups. Tech is important but it’s not everything.

Carmel, you have an extensive operational background. Given this experience, how do you view the positioning of some of the Israeli publicly-traded firms?
CS: I’m speaking as an analyst, definitely not as an insider, which I’m not. I like Comverse (OTC: CMVT.pk). This company is really implementing the right strategy to create a more focused and more profitable company and if things go right, there is a lot of value in this company at current stock prices. Amdocs (NYSE: DOX) is doing great. Their business is growing, they’re number one worldwide in billing and working diligently on growth engines in the nontraditional parts of their business. I’m sensing a very strong positive vibe in the market about their business.

Looking out a year or two from today, where is Israel’s business strength going to be?
CS: The consumer Internet was created and built in the U.S. Israel didn’t participate, relatively, that much in the first round. We’re now witnessing the emergence of the mobile Internet, and this is coming from Israel. The mobile phone is no longer being looked at just for its voice capabilities, it’s being considered as a data device. Many are trying to take web applications and make them work on the phone. This is just part of the story. Those companies, and many of them are located in Israel, who can start developing mobile applications from the ground up as they look how users will interact with the Mobile Internet are going to be the winners. These companies are working on application development as much as building sustainable businesses.

Does Google’s mobile initiatives influence this?
CS: It certainly does but the trend started before Google’s (Nasdaq:GOOG) recent moves for mobile. There is an Israeli ecosystem here of companies, applications, and people who are experts in their fields and are emerging as experts in mobile Internet technologies.

Thanks.

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The Greek's Week Ahead has been engineered to prepare you for events that could impact your portfolio this week.

After last week's unexpectedly disappointing earnings reports from the likes of Google ( Nasdaq: GOOG), Caterpillar ( NYSE: CAT) and Yahoo! (YHOO), the tone of this season's reporting calendar has shifted quite a bit. The first quarter's strong reports from the large multinationals in the Dow Jones Index spurred quite a run. The memory of those results took the Dow up over 14,000 last week, but the tone has since changed.

In recent issues of "The Greek's Week Ahead" we have looked forward to a short earnings run higher that we anticipated would last a couple weeks or so. Shares could still gain some enthusiasm from the plethora of reports due this week. They could also benefit from decreasing energy prices, which we view as a strong possibility. Oil and natural gas have already started weakening from recent highs. This week's inventory data on Wednesday and Thursday should prove important to the degree of decrease, though we think the power behind a declining price trend will be overwhelming in the short term.

We have quite a busy earnings week in store, and a good deal of market-moving news will be generated by companies, until Friday's key GDP and consumer sentiment reports.

Now let's take a look at the week ahead...

Monday's focus will be on corporate earnings and the beginning of two important meetings for the publishing and auto industries. The soap opera continues within publishing firm, Dow Jones ( NYSE: DJ), as the Bancroft family, who own a controlling interest, meets to discuss whether to follow the advice of Dow Jones' board of directors and accept Rupert Murdoch's $60 bid. Of course, the family could also side with the view of newly departed Director, Dieter von Holtzbrinck, who found the decision so disheartening that he withdrew his membership in the group. We found a couple things about the meeting very interesting. Christopher Bancroft reportedly left early, while Leslie Hill, a family member, abstained from the vote.

We wrote an article weeks ago that illustrates our belief that the family has strung Murdoch along in order to keep his bid in play as it attempts to lure another buyer it might better digest (see " Dow Jones Will Sell, but Not to Potter!"). If the Bancrofts let Murdoch's offer slip away, the next best proposal known to the public is the Greenspan offer for a 25% interest in DJ. The price is the same, but the family would still be involved, while allowing the Internet entrepreneur two board seats and an opportunity to implement his digital strategy. Greenspan has since returned to the table with a revised plan, a more detailed version of how he plans to create value for shareholders. We expected Ron Burkle to show up with an offer, but he has yet to do so, despite rumors that he might partner with Greenspan to raise the offer or acquire the entire company.

In effect, what the board has done here is serve its employer well, the shareholders of Dow Jones. Now, the controlling party can influence whether a sale occurs or not, while the Board remains neutral and avoids liability.

Also on Monday, the United Auto Workers Union begins formal discussions with Ford and General Motors, after having begun discussions with Chrysler on Friday. With national contracts set to expire on September 14, and taking the recent downswing in the business cycle into account, these meetings are critical to both parties. The big three need to bring their costs into parity with Japanese manufacturers, and if the UAW doesn't agree, that can happen via Mexican production for North America.

Earnings season has its second busy week ahead of it, and Monday starts the schedule with reports from Altera Corp. ( Nasdaq: ALTR), American Express ( NYSE: AXP), Arch Coal ( NYSE: ACI), Chemical Financial ( Nasdaq: CHFC), Crane ( NYSE: CR), Dr. Reddy's Laboratories ( NYSE: RDY), DSP Group ( Nasdaq: DSPG), Equifax ( NYSE: EFX), Everest Re ( NYSE: RE), Halliburton ( NYSE: HAL), Hasbro ( NYSE: HAS), Hercules ( NYSE: HPC), Merck ( NYSE: MRK), Netflix ( Nasdaq: NFLX), PetMed Express ( Nasdaq: PETS), PrePaid Legal ( NYSE: PPD), Schering-Plough ( NYSE: SGP), Taser International ( Nasdaq: TASR), Texas Instruments ( NYSE: TXN), Weatherford International ( NYSE: WFT) and others.

On Tuesday, we will be anxiously awaiting the usual ICSC-UBS Weekly Same-Store Sales Report. Recent weeks' trends have shown sales at a level well below prior year growth rates. For your information, we are going to begin tracking this report within our sidebar soon. Also on Tuesday, State Street reports its Investor Confidence Index. Recall, the report studies levels of risk held within portfolios. Considering June's report reflected an increase from May, to 97.2, we expect investor excitement heading into earnings season could drive a positive result for July.

St. Louis Fed President William Poole is scheduled to address a group in Delaware on the topic of energy and the U.S. macroeconomy. Internationally, North and South Korea are scheduled to hold high level military meetings. Perhaps the tension along the million man border could be reduced as a result. We can hope and dream... With everything becoming state controlled, it may not matter anymore that markets in Venezuela will be closed on Tuesday.

Tuesday is perhaps the busiest day of earnings season, with a slew of companies set to report. The day's schedule includes Aaron Rents ( NYSE: RNT), AFLAC Inc. ( NYSE: AFL), Akzo Nobel NV ( Nasdaq: AKZOY), Alliance Financial ( Nasdaq: ALNC), Amazon.com ( Nasdaq: AMZN), AT&T ( NYSE: T), Biogen Idec ( Nasdaq: BIIB), BJ Services ( NYSE: BJS), Calamos Asset Management ( Nasdaq: CLMS), Cavalier Homes ( AMEX: CAV), CDW Corp. ( Nasdaq: CDWC), Centex Corp. ( NYSE: CTX), Countrywide Financial ( NYSE: CFC), DuPont ( NYSE: DD), Eli Lilly ( NYSE: LLY), Energizer ( NYSE: ENR), Jacobs Engineering ( NYSE: JEC), JetBlue Airways ( Nasdaq: JBLU), Kimberly Clark ( NYSE: KMB), Lab Corp. of America ( NYSE: LH), Lockheed Martin ( NYSE: LMT), McDonald's Corp. ( NYSE: MCD), Nabors Industries ( NYSE: NBR), Occidental Petroleum ( NYSE: OXY), Panera Bread ( Nasdaq: PNRA), PepsiCo ( NYSE: PEP), Plantronics ( NYSE: PLT), Robert Half International ( NYSE: RHI), Sony Corp. ( NYSE: SNE), The Cheesecake Factory ( Nasdaq: CAKE), UAL Corp. ( Nasdaq: UAUA), USG ( NYSE: USG), Websense ( Nasdaq: WBSN), XTO Energy ( NYSE: XTO) and quite a few more.

When reported Wednesday, Existing Home Sales are expected to show an annual pace of 5.87 million homes sold in June. In May, the same report showed a sales pace of 5.99 million. It's our view that home builders are finally facing reality, and making serious cutbacks to production, while likely consolidating operations and laying off employees. This builder capitulation should better allow inventory to sell off, and eventually lead to stabilization and growth again. See, Wall Street Greek is not a permabear afterall; we just call it like it is. Earlier the same morning, the Mortgage Banker's Association will report on new applications.

The Fed is scheduled to release its Beige Book of regional economic conditions on Wednesday afternoon. Most of the regional data has been strong, so we do not expect a negative impact here. Also, New York Fed President Timothy Geithner will speak about economics and global integration. Of course, the regular Petroleum Status report at 10:30 a.m. EDT will be closely watched with oil prices showing signs of having reached a near-term top last week.

The earnings report schedule includes Alcon ( NYSE: ACL), Allegheny Technologies ( NYSE: ATI), Ameriprise Financial ( NYSE: AMP), Anheuser-Busch ( NYSE: BUD), Apple Inc. ( Nasdaq: AAPL), Baidu ( Nasdaq: BIDU), Cabot Oil & Gas ( NYSE: COG), Colgate-Palmolive ( NYSE: CL), Conoco Phillips ( NYSE: COP), Covance ( NYSE: CVD), DaimlerChrysler ( NYSE: DCX), Drugstore.com ( Nasdaq: DSCM), EnCana Corp. ( NYSE: ECA), Fair Isaac ( NYSE: FIC), Fiserv ( Nasdaq: FISV), General Dynamics ( NYSE: GD), GlaxoSmithKline ( NYSE: GSK), Honda Motor ( NYSE: HMC), IHOP ( NYSE: IHP), MEMC Electronic Materials ( NYSE: WFR), National Oilwell Varco ( NYSE: NOV), Nomura Holdings ( NYSE: NMR), Norfolk Southern ( NYSE: NSC), P.F. Chang's China Bistro ( Nasdaq: PFCB), Plug Power ( Nasdaq: PLUG), Psychiatric Solutions ( Nasdaq: PSYS), Pulte Homes ( NYSE: PHM), Qualcomm ( Nasdaq: QCOM), Rockwell Automation ( NYSE: ROK), Sealed Air ( NYSE: SEE), Seattle Genetics ( Nasdaq: SGEN), SEI Investments ( NYSE: SEIC), Symantec ( Nasdaq: SYMC), Boeing ( NYSE: BA), Tractor Supply ( Nasdaq: TSCO), Travelzoo ( Nasdaq: TZOO), WellPoint Inc. ( NYSE: WLP), Zebra Technologies ( Nasdaq: ZBRA) and many more.

Over the last two days of the week, the heavy earnings report schedule will be complemented by a handful of important economic data, so trading could get really hot and heavy. The Durable Goods Orders Report is due bright and early on Thursday morning. Bloomberg's consensus expects orders to show a 2.0% June rise, compared to a 2.8% decrease in May. Weekly initial jobless claims will be reported as usual, with expectations for 312,000 new collectors of unemployment benefits. This is about in line with recent results, and not a market moving forecast. The Help-Wanted Index is reported Thursday, but since published ads are now overshadowed by online advertising, this data is somewhat insignificant.

Following the existing home sales report of a couple of days prior, new home sales for June are expected to have run at an annual pace of 890,000, according to Bloomberg. That's down from 915,000 reported in May.

Earnings season continues with reports from 3M Company ( NYSE: MMM), Aetna ( NYSE: AET), Airtran ( NYSE: AAI), AmeriSourceBergen ( NYSE: ABC), Amgen ( Nasdaq: AMGN), Apache ( NYSE: APA), AutoNation ( NYSE: AN), Ballard Power Systems ( Nasdaq: BLDP), Beazer Homes ( NYSE: BZH), Blockbuster ( NYSE: BBI), Bristol-Myers Squibb ( NYSE: BMY), Bright Horizons ( Nasdaq: BFAM), Cash America ( NYSE: CSH), Celgene ( Nasdaq: CELG), Coherent ( Nasdaq: COHR), Comcast ( Nasdaq: CMCSA), D.R. Horton ( NYSE: DHI), EarthLink ( Nasdaq: ELNK), Echelon Corp. ( Nasdaq: ELON), Evergreen Solar ( Nasdaq: ESLR), ExxonMobil ( NYSE: XOM), Ford Motor ( NYSE: F), Global Payments ( NYSE: GPN), Goodrich ( NYSE: GR), Janus Capital ( NYSE: JNS), Kellogg ( NYSE: K), KLA-Tencor ( Nasdaq: KLAC), Kulicke & Soffa ( Nasdaq: KLIC), L-3 Communications ( NYSE: LLL), MBIA ( NYSE: MBI), McAfee ( NYSE: MFE), Millennium Pharmaceuticals ( Nasdaq: MLNM), Newell Rubbermaid ( NYSE: NWL), Office Depot ( NYSE: ODP), Penn National Gaming ( Nasdaq: PENN), Potlatch ( NYSE: PCH), Raytheon ( NYSE: RTN), Royal Carribean ( NYSE: RCL), Southern Company ( NYSE: SO), The Dow Chemical Company ( NYSE: DOW), Travelers ( NYSE: TRV), TheStreet.com ( Nasdaq: TSCM), US Airways ( NYSE: LCC), VeriSign ( Nasdaq: VRSN), Wendy's ( NYSE: WEN), XM Satellite ( Nasdaq: XMSR), and so many more.


On Friday, two very important bits of data will be reported to help us analyze both the past and the future. At 8:30 a.m. EDT, second quarter GDP is expected to have grown at a 3.2% growth rate, compared to 0.7% growth in Q1. The price index is seen measuring up 3.4%. Wall Street Greek is on the record anticipating Q2 growth before later softness. We view housing critical to the economic wellfare of Americans. Despite the relatively lower level of interest rates, strong unemployment and international demand, which no doubt are very supportive, there are significant price pressures on a good deal of Americans. The expenses of gasoline and food are two of the most important and common expenses seen across this country. There's no escaping it. Consumer spending growth has weakened this year. We'll get a look see into how consumers are feeling when the Michigan Consumer Sentiment metric is provided at 10:00 a.m. Sentiment in July is seen at 91. In June, sentiment measured 85.3, but renewed stock market gains have helped boost the figure more recently. Even so, things are changing in the market.


Reporting earnings on Friday, look for news from Active Power ( Nasdaq: ACPW), Baker Hughes ( NYSE: BHI), Celanese ( NYSE: CE), Chevron ( NYSE: CVX), Fortune Brands ( NYSE: FO), Gene Logic ( Nasdaq: GLGC), Idexx Laboratories ( Nasdaq: IDXX), Ingersoll-Rand ( NYSE: IR), Medco Health Solutions ( NYSE: MHS), Sepracor ( Nasdaq: SEPR), Veeco Instruments ( Nasdaq: VECO) and more. We hope you have found value in this week's report.

Thank you again for your interest. We hope you will continue to support our advertisers and tell your friends about the Wall Street Greek. ( disclosure )