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Telit trauma continues amid CEO drama
The chief executive of connectivity kit designer Telit Communications (TCM:AIM) is stepping down from the board after it emerged he had previously been indicted in the US.
Shares in the Internet-of-Things specialist are bouncing back at 135p after Oozi Cats resigned with immediate effect, on hopes the move could mark a turning point for the business. Telit revealed an indictment against Cats had been ‘knowingly withheld’ from advisers at the firm.
Telit said ‘it is a source of considerable anger’ that the charge had not been disclosed and it had ‘only been made aware of its existence through third parties’.
The firm launched an investigation last week to assess whether Cats, who has led the firm since 2000, was the same Uzi Katzi who had been accused of wire fraud in Boston in 1992.
It is reported that he and his wife, Ruth V. Katz, were accused of ‘flipping’ properties to take out mortgages with inflated values.
The allegations come just days after Telit’s share price collapsed. Shares fell from 257.5p to 100p after the business slashed its dividend, cut growth targets and revealed it had plunged into the red in its half year results (7 Aug).
Yosi Fait is acting as interim chief executive officer and will conduct a review of the company’s activities and costs. The firm said it was ‘moving on from this difficult situation’ and was confident in the strategic and operation strength of the business.
Telit said it would appoint three additional non-executive directors, one of whom will become chairman. The company also dismissed speculation over its financial condition, trading performance and business relationships as having ‘no substance’. The firm said it ‘stands behind the group’s audited accounts to 31 December 2016 and the most recently published interim statement’.
Israeli firms disappoint
Telit is the latest in a string of Israeli tech firms to disappoint investors. Earlier this year artificial intelligence business Adgorithms – which has since changed its name to Albert Technologies (ALB:AIM) – revealed revenue dropped 26% in 2016 and the firm was $7.9m in the red for the year, compared to a loss of $2.2m a year earlier. The company also warned on profit shortly after joining the market in 2015. The shares are down 80% on their issue price at 27p
Albert Technologies says its research and development expenses more than doubled to $5.1m while sales and marketing costs leapt from $950,000 in 2015 to $4.1m in 2016.
But there are some success stories coming from the region; earlier this month US company Intel bought Israeli business Mobileye, which specialises in autonomous driving technology. Intel paid $15.3bn for the firm as it ramps up its focus on driverless cars.