Note:  For the financials, please visit the Magic website at
http://www.magicsoftware.com.



Contact:
Katharine Hanley
Director, IR/PR
Magic Software Enterprises, Ltd.
(949) 250-1718 ext. 220
khanley@magicsoftware.com

Guy Bernstein
Vice President, Finance
Magic Software Enterprises, Ltd.
+972-3-538-9292
gbernstein@magicsoftware.com



                        MAGIC SOFTWARE ENTERPRISES
                   ANNOUNCES FIRST QUARTER 2001 RESULTS


OR YEHUDA, ISRAEL (May 10, 2001) ? Magic Software Enterprises, Ltd.
(Nasdaq: MGIC), a leading provider of state-of-the-art application
development technology and business solutions, announced today results for
the first quarter ended March 31, 2001.

First Quarter Results
Total revenues for the first quarter 2001 were $20.0 million as compared to
$21.7 million for the comparable period in 2000, a 9% decrease over last
year.

Pro forma net loss for the first quarter (which excludes amortization of
goodwill and intangibles, and any non-recurring expenses) was $2.8 million
or $0.09 loss per share, compared with the $4.5 million pro forma net
income or $0.16 earnings per share posted for the same period a year ago.

Actual (or GAAP) net loss for the first quarter of 2001 was $9.4 million or
$0.32 loss per share, compared with the $4.0 million net income or $0.15
earnings per share recorded one year ago.

 ?Our first quarter results reflect the sharp decline in capital spending
in the information technology sector, and are consistent with the
realization that there will be periods of growth in our industry both above
and below expected levels,? said Menachem Hasfari, chief executive officer
of Magic.  ?However, given our strong cash position, we continued to invest
in new products, R&D, and our sales and service capabilities, and I feel
confident that we will emerge stronger than ever from the current economic
downturn, returning to profitability by the second half of this year.?

The Company took a $5.5 million restructuring charge during the quarter as
a result of a cost-reduction plan aimed at closing certain operations in
areas where market demand had significantly moderated. A significant
portion of this charge is related to the closing of Caswell, a Magic
subsidiary and application company in the Netherlands.

?Magic is using the current slow period in the industry to prepare its
infrastructure to take advantage of the long-term growth potential of the
software market,? added Hasfari.  ?Looking forward, we remain focused on
maximizing long-term earnings by continuing to deliver increasingly
innovative application development technology and business solutions
designed to meet our customers? critical needs.?

First Quarter Developments

New Products
During the quarter, Magic continued to introduce new or enhanced products
designed to increase the Company?s revenue and pipeline, and its ability to
meet its goals for 2001.

In February, Magic launched its revolutionary new application development
tool, Magic eDeveloper. Magic eDeveloper is part of the Magic eBusiness
Platform, a comprehensive framework for rapidly developing, customizing and
deploying complex e-business solutions. To date, 15 launch events have
taken place before crowds totaling more than 3,000 developers worldwide.

Also early in the quarter, Magic released Magic eContact? Version 2, which
provides contact center and telemarketing agents the professional tools
needed to efficiently and cost-effectively manage customer interactions.

Strategic Alliances
Magic took several steps to solidify its growing relationship with IBM
during the quarter. The Company has recruited a VP of Strategic Alliances
in the U.S. who will focus on strengthening the relationship with IBM.
Already, there are significant discussions underway to increase cooperation
in the areas of R&D and business development.

In addition, Magic was invited by IBM to share the main stage with senior
IBM executives in the Linux Forum at the IBM PartnerWorld event. At this
event, IBM showcased Magic?s highly customizable e-business solution, Magic
eMerchant, in its IBM pavilion. Magic also has been appearing with IBM in a
series of e-business roadshows.


Recognition
In addition, Magic received considerable recognition during the quarter.
In March, Customer Inter@ction Solutions magazine awarded Magic its Product
of the Year 2000 Award for the Company?s Magic eService? Web-based customer
management solution.  The award acknowledges those products the publication
believes embody ?the latest technological evolution and application
refinements? among companies? offerings.

Also in March, Magic was named a finalist in the American Electronics
Association?s (AEA?s) 2001 High-Tech Awards for its Magic eFactory?
solution, a real-time apparel manufacturing data collection system that
gathers and responds to shop floor information during production.  Winners
of the AEA 2001 High-Tech Awards will be announced on May 17th.

New Deals
Several significant new deals were closed during the quarter as well:

ž    The Office of the Administrator of the Courts (OAC) for the State of
Washington (U.S.), to deliver a Web-based Juvenile Tracking System that
takes advantage of Magic?s extensive Web development expertise and
integration capabilities;
ž    NMB-Heller Holding N.V. (Germany), to develop and implement a new EDP
system for the company?s subsidiaries in Germany, Poland, the Czech
Republic and Slovakia; and
ž    SEPEPN (France), to develop and implement a customer relationship
management solution for the organization?s sales and technical departments
to enable agents to propose, book, plan, install and bill rentals of halls
and booths for major exhibitions.

Among the quarter?s larger Magic eMerchant deals were Promocash/Groupe
Carrefour (France) and MCC-Sequel K.K. (Japan). In addition, Magic closed
several Magic eService deals during the first quarter, including:  Leroy
Merlin (France), B&N Software AG and Intersoft AG (Germany), and Websphera
and ORAD (Israel).

Conference Call
Magic will host a conference call on Thursday, May 10, 2001, at 12:00 noon
EST (9:00 a.m. PST), to discuss the Company?s first quarter results.  To
participate, interested parties should call the appropriate number listed
below five to ten minutes prior to the start of the conference call.

     North America: 800/553-0351
     Internationally:    612/332-0819

Callers should reference ?Magic Software Q1 Earnings Conference Call? with
the AT&T Operator.

A replay of the conference call will be available from 12:30 p.m. PST, May
10, 2001, through 11:59 p.m. PST, May 17, 2001. Interested parties should
call the appropriate number below:

     North America: 800/475-6701
     Internationally:    320/365-3844

Callers should reference Access Code No. 586429.

Investors also will have the opportunity to listen to the conference call
over the Internet through Vcall, a service of the Investor Broadcast
Network, at http://www.vcall.com.  To listen to the ?live? call, investors
should go to the Website at least fifteen minutes early to register, and
download and install any necessary audio software.  For those who cannot
listen to the live Internet broadcast, a replay of the conference call will
be available for up to 90 days on the Vcall Website.

Magic Software Enterprises, a member of the Formula Group (Nasdaq: FORTY),
develops, markets and supports software development and deployment
technology that enables enterprises to accelerate the process of building
and deploying applications that can be rapidly customized and integrated
with existing systems.  Magic technology, applications and professional
services are available through a global network of subsidiaries,
distributors and Magic solutions partners in approximately 50 countries.
The Company?s North American subsidiary is located at 1642 Kaiser Avenue,
Irvine, Calif., 92614, telephone (949) 250-1718, fax (949) 250-7404,
http://www.magicsoftware.com.


The Formula Group is an international information technology company
principally engaged, through its subsidiaries and affiliates, in providing
software consulting services, developing proprietary software products and
producing computer-based solutions.

Except for the historical information contained herein, the matters
discussed in this news release include forward-looking statements that may
involve a number of risks and uncertainties.  Actual results may vary
significantly based upon a number of factors including, but not limited to,
risks in product and technology development, market acceptance of new
products and continuing product conditions, both here and abroad, release
and sales of new products by strategic resellers and customers, and other
risk factors detailed in the Company?s most recent annual report and other
filings with the Securities and Exchange Commission.