Jewish Post, Indianapolis, Marion County, 2 January 1985 — Page 2

ry 2, 1985 Jewish Post and Opii

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INVESTING By LOUIS EHRENKRANTZ Mr Ehrenkranti is a Senior Vice President of Rosenkranti. Ehrenkrantr. Lyon ft Ross at 6 East 43rd Street. New York. N Y 10017 He welcomes all written questions

The Economic Outlook Israel Develops Hole New Industry

The advertising companies have had a spotty market record until recent months. With their diversification into logically related areas, the ad makers are gaining support from sophisticated money managers. Involvement in public relations and foreign markets is drawing attention to the industry leaders. I look for Ogilvy & Mather International, trading at 33 3 /4, to make a short term move to 44 as their industry position becomes more appreciated. My long term price target is higher than that. Ogilvy & Mather’s earnings have disappointed investors only three times in the past 18 years. The company has positioned itself so that earnings progress will now accelerate: OGIL earned $1.73 per share in 1982, $1.99 last year, and should show as much as $2.75 this year. Another good gain is forecast for 1985. THIS GROWTH IS being accomplished via an intelligent and selective acquisition route, cost controls and the addition of quality clients. Ogilvy is the third largest advertising agency in the U.S., serving 1,800 clients in 40 countries. American Express is its largest account, with recent client additions including Hallmark, LTV and Seagram. One would think that a giant agency handling American Telephone, American Express and Kimberly-Clark might attempt to maintain the status quo. Ogilvy & Mather, however, has indicated by its actions that it is still growth-minded: OGIL acquired Rolf Werner Rosenthal Inc., a medical advertising agency billing in excess of $40 million. Ogilvy's acquisition of Dudley-Anderson-Yutzy, and its interest in a French public relations firm, give it a growing presence in the public relations industry, a logical complement to the ad business. Ogilby has substantial overseas interests. About 40% of its income is derived from these sources. Its Meridian Advertising represents a group of agencies operating in Australia and Southeast Asia. OGIL also owns an international chain of direct-response offices. It would seem logical to expect Ogilvy to be a substantial beneficiary of a declining dollar. ALTHOUGH FEARS OF a recession in 1985 have been expressed by some economists, the quality and nature of Ogilvy’s clients (and the agency’s reputation for success) argues against an earnings setback. As the earnings progress becomes more evident, I look for OGIL’s price-earnings ratio to expand handsomely. This is one Over-the-Counter issue that is of quality calibre. (Louis Ehrenkrantz is a Director of Ehrenkrantz & King, a Division of Reich & Co., Inc., members of all major Exchanges. He publishes the monthly Undiscovered Equities for that Firm and specializes in managing investment accounts.)

(Continued From Prev. Page) matrilineality as an “uncontested and universal practice” and declared that “millions of Jews faithful to the traditional definition will never be prevailed upon to accept as Jews the children bom to a non-Jewish mother without proper conversion. ’ ’ BUT DR. Weiss-Ros-marin asserted that far from weakening the Jewish community, “emancipating” the Jewish father by giving him the right to transmit his Jewish identity to his children would increase the size of the Jewish community and “add strength to our Jewish survival potential.” Rabbi Jack J. Cohen, former director of the Hebrew U. Hillel, pointed out that the

Jewish commitment even of children of Jewish mothers married to non-Jews will be largely conditioned by the family and communal environment. Their identity as Jews by halachic standards thus becomes a “formality which has no relevance whatsoever in terms of their involvement in Judaism.” “On the other hand,” Rabbi he continued, “where a Jewish father has a strong desire to raise his children as Jews and has the tacit or active approval of his non-Jewish wife, even Halakhic-oriented Jews should wish to encourage the eventual agreement of the children (and possibly the wife, as well) to undergo the formal process of conversion.”

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By STEVEN E. PLAUT Once upon a time there was a young Jew who lived in the Land of Israel. One day the Jew received his pay check from his employer only to find that 60% of his salary had been taken away and sent to his government. The Jew was very upset and shook his fist at the sky swearing never again would this happen. So the Jew quit his job and decided to open his own business. AND SO WAS begun a new corporation whose name was Holes, Ltd. The corporation was to produce holes to be used in the manufacture of bagels in Israel and abroad, since as is well known no bagel can be produced without a hole. The Jew recorded his factory as a licensed firm and set to work. First, the Jew went to the Ministry of Trade and an “approved enterprise” under the law for encouragement of capital investment, so that he would be able to obtain start-up funds, the Ministry bureaucrats hesitated. So the Jew pointed out how essential his factory was for the economy. No modem country can possibly think about getting along without its own hole industry. His corporation would provide gainful employment for many workers who would otherwise make a living in the services or playing the stock market. MOREOVER bagels with holes are a national symbol, Jewish soul food, and a source of nourishment for soldiers, tourists and civil servants. In addition, his enterprise would help the country to absorb new immigrants, since as is well known Jews from New York are exceedingly fond of bagels. Nonetheless, the Ministry delayed reaching a decision. At this point the Jew expressed interest in setting up a small subsidiary in the Galilee or Samaria. The Ministry decided to grant the Jew’s request. The Jew was very pleased; his enterprise was “approved.” AS OWNER of an “approved enterprise,” the Jew received a number of subsidized loans, some unlinked, and allocations of land and water. He also received a grant on the basis of being an “infant industry.” The Chief Scientist in the Ministry of Trade and Industry gave him a grant to develop new methods of hole manufacture with computerization and robotics. The Ministry of Religion gave him his kosher certification. The Finance Ministry promised to treat his inventories as non-pro-tecled assets, subject to accelerated depreciation under the Law of Taxation in Inflationary Conditions. The Ministry of Labor funded a new program to retrain unemployed academics in high-tech

hole manufacture. The Jew then returned to the Ministry of Trade and Industry. He explained that he was having great difficulty getting his enterprise well established due to the dumping of cheap imports from abroad. Holes were being sent to Israel at prices of practically nothing, leading to a threat to the viability and profitability of his company. The Jew’s difficulties were immediately discussed, and a series of new measures were adopted to assist him. THE MINISTRY pressured the army and the schools to refuse to buy any bagel that did not contain a blue-and-white hole manufactured in Israel at the Jew’s factory. The excise tax on bagels produced by factories who did not buy his holes was increased, while the VAT on bagels containing his holes was cut. The Jew was offered “exchange rate insurance” at a very liberal terms for any holes he would ship abroad, as well as non-linked directed credit at 30% interest from the fund to support production for exports. But the financial problems of the corporation refused to be solved. So the Ministry of Trade and Industry decided to fund a series of public service announcements about the troubles of the sector. These called on Israelis to boycott imported holes to prevent unemployment. When someone noticed that imported holes were being sold for less than one agora, a new slogan was coined by the Ministry: “No more grush holes!” In other commercials, buxom bra-less beauties were shown frolicking along the beaches singing the praise of the Jew’s product. (The feminist organizations denounced this as a demeaning exploitation of the female body.) Albert, the famous TV fruit man, pointed out how well a holed bagel goes with Avocado salad. BUT THE financial hardships continued. And so the Ministry of Trade and Industry decided to set up a cartel for the Jew, and forbade any sale of holes by competitors outside the quotas set. As a result the Jew was able to set up additional factories for producing holes for the manufacturers of car tires and wedding bands, who were required to buy his output. A council for hole marketing was established to aid exports of Israeli holes abroad. The Ministry of Science and Infrastructure announced plans for a new space agency that would explore black holes, made in Israel of course. Alas, the corporation still was in the red. The Jew explained that if something were not done, he would be forced to lay off workers, worsening

the recession. The workers committee set up pickets in Jerusalem, and in a large demonstration burned boxes full of non-hole Hanukkah cakes. The workers sent copies of their pay checks to the TV station and the newspapers to show how badly they were paid. The Histadrut announced warning sanctions to show solidarity with the struggling hole work ers. Rumors spread of the emigration of some frustrat ed hole workers. THE GOVERNMENT set up a public commission to study the industry ’s problems After six months of hearings and deliberations, the commission presented its recommendations, only part of which were publicized. Apparently the commission favored closing the factory, but the Knesset committee on finances rejected that idea out of hand, due to fear of unemployment. The Knesset reaffirmed that the hole industry was necessary for economic independence. The Ministry of Housing announced it would increase even more the number of holes it was purchasing for the roofs of public housing The Securities Commission granted permission for a new issue of stock to raise funds for retooling and moderniza tion of the industry. The Bank of Israel offered to buy holes to be used as additional zeroes on new currency denominations. The Ministry without portfolio for economic affairs prepared a new three year recovery program that he predicted would lead to exports of $40 million of holes per year. BUT, WOE AND alas, the factory continued to lose money. Finally the government came to the conclusion that in order to save the industry and prevent layoffs, the corporation would be nationalized. It bought out the Jew. He retired with his family to his mansion in Caesarea, where he lived happily ever after. (Prof. Plant teaches eco nomics at the Technion at Haifa and is associated with the Israel Center for Social and Economic Progress.)

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