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Nogatech: Chipping into the IPO Market

The demand for video over the Internet is definitely growing. This makes perfect sense to me, since I have many business colleagues and friends across the globe. With the click of a mouse, in a manner of seconds, I can easily videoconference with a colleague in Europe or a friend in Hawaii.

Nogatech Inc. designs, develops and markets computer chips that establish connections between video devices across a variety of networks. These chips are designed to provide high quality video, low power consumption and advanced capabilities.

The price range is $14-16, the Lead Underwriter is WR Hambrecht & Co and the proposed ticker symbol is NGTC.

Nogatechs chips and related decompression software enable real-time transmission of signals from video sources into personal computers and hand-held personal computing through the Universal Serial Bus (USB) interface standard. Their chips are integrated into PC digital video cameras, video capture devices and PC-TVs.

Nogatech began their operations in 1993; their first products were video and sound chips embedded in PCMCIA cards. In 1998 they introduced a chip that compresses video for transfer through the Universal Serial Bus interface to computers. In 1999 Nogatech began selling a chip that allowed streaming of compressed video, audio and data via the USB plug. In the third quarter of 2000 they expect to release a chip that allows cameras to take digital still pictures when detached from computer and live video when connected to computer.

Nogatechs products are compatible with the Windows 95, Windows 98, Windows 2000, Mac OS and Windows CE operating systems and are compatible with a wide variety of video applications.

Although Nogatech has an office in California, their main office and research center is located in Israel. Most of their executive officers and directors are nonresidents of the United States. In addition, over half of Nogatechs sales are to companies outside of the United States with a high focus on customers in Japan and Taiwan.

Nogatech boasts a list of investors that includes the Kenwood Corporation (12.6%), Tomen Electronics Corporation (12.6%), Holland Ventures B.V. (11.0%), Les Fils Dreyfus & Cie S.A. (8.4%), Ophir Holdings Ltd. (8.2%), Nomura International plc (6.9%), Docor International B.V. (5.5%) and Inventech Ltd. (5.5%).

Nogatechs revenues have increased dramatically from $2.6 million in 1997 to $8.9 million in 1999 with a decreasing net loss of $1.5 million in 1997 to $1.1 million in 1999.

Nogatech has a history of improving with the times. However, as great as it is to be on the cutting edge, it is always a risky proposition. Working internationally has its risks too. But the companz is likely to launch its IPO, although like most other IPOs, the valuation will likely be subdued.