Israel's N-trig eyes Nasdaq IPO in late 2010

Mon Apr 6, 2009 10:36am EDT

* Could go public by late 2010 if economy improves

* If economy remains weak would raise funds privately

* Collaborating with Microsoft on multi-touch functions

By Tova Cohen

KFAR SABA, Israel, April 6 (Reuters) - N-trig, an Israeli start-up that makes a pen and touch device for notebook computers, would seek to go public on Nasdaq in late 2010 if the economy improves, its chief executive said on Monday.

The company, which has raised $75 million to date, including $24 million in December from venture capital funds and Microsoft Corp (MSFT.O), is well set financially for the coming year.

"If the economy improves and our plans are fulfilled ... the latter part of 2010 is a reasonable time for our company to go public," Amihai Ben-David told Reuters.

If the economy remains weak, than N-trig might raise another round of private funding, but not before mid-2010, he added.

Ben-David said his goal would be to take the company public rather than sell it to another firm.

"I think that we're building a company for the public market," he said. "We're not a technology-centric company, we're a full blown corporation. As such we're very suitable to go public and stand on our feet."

N-trig produces a panel that is placed over an LCD screen on a notebook, providing the ability to operate a computer through touch, in the style of the iPhone. It is accompanied by a stylus that enables the user to also write on the screen.

N-trig, which has over 110 workers and offices in Israel, Texas and Taipei, started selling its product in late 2007.

"The first quarter of 2009 was our biggest quarter ever and hopefully that will be our reality over the next few quarters as well," Ben-David said.

N-trig's main competitor is Wacom (6727.T) of Japan, which is now adding touch to its pen tablets portfolio.

N-trig's touch technology is deployed in Dell's Latitude XT and XT2 notebooks as well as HP's TouchSmart. Both are tablet notebooks, with swivel screens that become a slate.

APPLES BOOSTS TOUCH APPEAL

N-trig's drive to inject the notion of touch into the marketplace received a boost when Apple launched the iPhone.

"Suddenly our story became much much clearer to our potential customers," Ben-David said, adding: "We believe that direct manipulation is where the interface of people with computers is going."

Ben-David believes touch will replace the mouse completely, though he said the keyboard was here to stay.

N-trig's product will receive more reinforcement when Microsoft soon launches its Windows 7 operating system, which will use multi-touch functionality as a selling point.

N-trig has a collaboration agreement with Microsoft to include its technology with Windows 7. Whereas now N-trig's product can be used with one or two fingers, mainly supporting zoom and rotate functions, Windows 7 will support up to 10 fingers, allowing for much more elaborate gestures.

Ben-David estimated that 50 or more independent software vendors area preparing applications for multi-touch that will be ready for launch together with Windows 7.

N-trig plans to announce in August two more customers that will incorporate its product in their laptops, though these will be traditional notebooks, rather than tablet style. This represents a much larger market, as more than 150 million of this form are sold annually, compared with 3 million tablets.

Israel's start-up sector has been shaken by the global economic crisis with venture capital funds more reluctant to invest. Although Israeli high-tech companies raised $2.08 billion in 2008, an eight-year high, capital raising in the fourth quarter was down 34 percent from the third quarter, according to the Israel Venture Capital (IVC) Research Center.

IVC projects a weaker funding year for start-ups in 2009. It also estimated VC funds will raise only $300 million in 2009, down from $793 million in 2008 and $1.1 billion in 2007.

Because of the global recession, N-trig's sales are not at the expected volume and "price pressrues are unbearable", Ben-David said.

"On the other hand, we are a very secure company. We did raise money in the midst of the crisis, we are very well funded, we are not laying off people," he said. "We're probably more cautious in the way we do our business but there's definitely no panic, no change of plans."

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