| Forum chairman Erez Meltzer (formerly CEO of Creo-Scitex in Israel) and forum management member Shlomo Gradman (CEO of Monterey Design Systems) are calling on the government to set up government funds for supporting young high-tech companies. | ||||
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HP buys Indigo for $629 mln in shares – Experts analysis
Hewlett-Packard Company (NYSE:HWP) and Indigo N.V. (Nasdaq:INDG) announced that they had entered into an agreement for HP to acquire the remaining outstanding shares of Israeli company Indigo, which produces commercial and industrial printing systems.
(Source: Seybold Bullitin.com, Sept 7, 2001) The future of the color digital printing market is taking shape. It now looks like there will be three major competitors: Heidelberg (which is officially launching the NexPress 2100 at the show), Xerox (with the official introduction of the iGen3, aka “FutureColor”) and now HP. Indigo, on its own, would not have been able to compete in this league, so it’s clear that the deal is a good (maybe even an essential) move for them.
But it remains uncertain whether HP will fare well in this market. Its experience with desktop laser and ink-jet printers is not very relevant. Unquestionably, HP has good contacts in thousands of corporations. But how can they be leveraged and converted to sales of high-quality color printing devices?
Landa doesn’t think HP will sell many high-end digital presses directly into the corporations it currently serves. But he thinks that it may be possible to build on the base of HP’s corporate users, many of whom have outgrown their desktop printers. He thinks they might be persuaded to send work to the nearest HP/Indigo-equipped service provider, and that this demand “pull” will drive sales of the machines. We (Seybold) don’t think that’s likely. Digital presses that cost hundreds of thousands of dollars will continue to be a tough sell, and slapping the HP name on them won’t necessarily help much. We know that HP has the financial and technical resources to become a major player in the high-quality printing market in the long term. But does it have the patience? It could be a long, slow process.
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5 years comparison between Scitex and Indigo
(source: The Marker, Sept 10, 2001) The good news is that after a long alliance, PC and printers maker Hewlett Packard (NYSE:HWP) decided last week to acquire full ownership over Indigo (Nasdaq:INDG, INDGW). HP’s decision came, no less, at the lowest point of the computers world in general, and the entire Israeli economy in particular.
The bad news is that the dream is dead. Indigo founder and chairman Benny Landa’s dream, that is. He wanted to make the Israeli digital printing into a world leader, but now he has to step down from his executive aerie.
From now on, Indigo’s fate depends on an American giant ruled by executives sitting in Palo Alto, California. There are clear marketing and managerial advantages to the foreign connection, but also disadvantages, as many Israeli companies have learned in recent years.
The good news is that Indigo won’t be firing any of its workers, Landa promises. If anything, based on growth forecasts of 30% a year, it may recruit new hands. Indigo is one of Israel’s bigger hi-tech employers. It’s welcome news for the hi-tech it, which is reeling from one massive layoff after another.
The bad news is that as of today, Landa can advise HP, but that’s it. If the forecast was wrong and HP’s situation worsens, it could callously chop limbs off its Israeli unit without a second thought.
The good news is that HP is paying at least $629 million for the remaining 86% of Indigo’s stock that it doesn’t already own. It’s paying in stock, this is true. But Indigo’s shareholders can throw the HP shares right back onto the market, ensuring they will get around that amount. The Landa family alone will be getting $300 million worth of stock.
The bad news is that over the last decade, Indigo raised almost that very amount from investors. Meaning, it barely created any value, certainly if you factor in how long it’s been around, raising money.
Therefore, the Landa clan aside, almost all Indigo’s investors lost money on the deal. If you bought Indigo stock in 1994, when it first went public, you lost 65% of your money. Nasdaq gained more than 100% during that time.
The good news is that after five years of the capital market doubting Indigo’s business model, because of the company’s constant losses and high product prices, HP came along and vindicated it.
The bad news is that HP still has to prove that Indigo’s product and business model were worth the price it’s paying. Indigo has reached sales of about $200 million a year, compared with $140 million in 1995. It hasn’t made one red cent all its life and stayed afloat thanks to investor infusions.
The good news is that becoming an HP division opens new marketing vistas for Indigo, greatly enhancing its chances of surviving in the tough new business environment, where capital infusions are scarce.
The bad news is that if a company like Indigo, a pioneer in its field, a company that invented its field, a company that had achieved annual sales of $200 million a year, a company rich in experience, a company with one of the richest founders in Israel and hence with more room to maneuver ? if a company like that decides it can’t make it in the global market by itself, what Israeli companies can?
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(Source: Globes Sept 7, 2001) HP currently owns 14.8 million of Indigo’s common shares, representing 13.4 percent of the company’s outstanding shares. Under the terms of the agreement, HP will acquire the remaining shares of Indigo for approximately $629 million in HP common stock, and a potential future cash payment of up to $253 million contingent upon Indigo’s achievement of long-term revenue goals, for an aggregate potential payment of up to $882 million. The goals are for Indigo to achieve $1.6 billion in cumulative sales revenue over the next three years.
This is a high threshhold, considering that in the second quarter of this year, Indigo achieved record sales of printing machines, yet its revenue amounted to only $48.1 milion, on which it made a loss of $2 million, or $0.02 per share. However, under the agreement, Indigo’s shareholders will receive a proportionate amount of the promised sum even if sales are below $1.6 billion, as long as they surpass $1 billion. The companies said the acquisiton was expected to add to earnings per share in its first full year of operation.
“The Indigo team has a rich history of innovation and strong customer relationships that has made it a leader in the commercial printing market,” said Carly Fiorina, chairman and chief executive officer, HP. “Our two companies have a proven track record of collaboration, and this new relationship will result in an even more compelling suite of offerings and support services for customers around the world.”
HP already invested
A year ago, HP invested $100 million in return for 13.4% of Indigo, which is a leader in the development of digital printing machines. The companies also signed a technology and marketing agreement, whereby HP would sell Indigo’s digital printing systems in an OEM arangement, and the two companies would develop new machines jointly.
The strategic alliance between HP and Indigo was in fact forged in 1998, but was fairly low key until last year’s investment. The alliance found expression in the link between HP’s digital camera and Indigo’s printing machines.
The launching of the digital printing machine, and the forthcoming launch of machines costing under $100 intended for desk-top computers, represent HP’s latest shots in the war in the printing market which occasioned it a 3% fall in revenue in this field in the last quarter, to $5 billion, and a 40% fall in operating profit to $410 mllion.
“HP intends to lead the transformation of commercial printing into a web-enabled, all-digital industry,” said Vyomesh Joshi, president of HP’s Imaging and Printing Systems. “The speed, image quality and cost effectiveness of Indigo’s technology will now be available to a larger audience through HP’s brand strength and global reach. By linking Indigo’s digital press to higher-value pages, we believe we can grow our commercial printing division over time into a multi-billion dollar HP business. We have worked closely with Indigo’s management for several years and expect a smooth transition as they join the HP team.”
Not Compaq
“This is a very different acquisition” from Compaq,” Joshi said. “It is really driving what we need to do… We will continue to do these kinds of activities for growing the printing and imaging business.”
Salomon Smith Barney’s John Jones told Reuters that HP was dealing with separate issues from the Compaq transaction, which has sent Compaq and HP shares plummeting, and adding new technologies to its printing business.
“This is a very different technology than either the company’s Inkjet or laser product offerings, although long-term it may be a technology that can be used in the photographic markets,” he said.
“Our vision has always been to lead the printing industry into the digital era and to see Indigo technology pervade the commercial printing market,” said Benny Landa, Indigo founder, chairman and CEO. “Now, as part of HP, that goal is in sight.”
Indigo’s versatile liquid electro-photography (LEP) technology spans commercial printing, industrial printing and photo-finishing. According to Indigo, LEP combines digital laser imaging with ultra-small ink particles enabling prints of superb quality to be produced at offset printing speeds.
Indigo is a $200 million business with a growing installed base, strong intellectual property in LEP, a highly profitable consumables business, a direct and specialized sales force, and experienced engineers. The company has 1100 employees, is headquartered in The Netherlands, and has R&D and manufacturing operations in Israel. Upon completion of the transaction, Indigo will operate as a new division within HP’s Imaging and Printing Systems business.
In the second quarter of 2001, Indigo reported revenue of $48.1 million, up 18 percent from the $40.8 million reported for the second quarter of 2000. Revenue was the highest ever reported by the company for a second quarter. Indigo’s net loss for the quarter was $2.0 million, compared with a net loss of $6.0 million for the second quarter of 2000.
Indigo shares closed Thursday at $6.30 on Nasdaq, up 14.13 percent.
Hewlett-Packard shares closed on Thursday at $17.70, off 51 cents or 2.8 percent, reducing the value of its all-stock offer for Compaq to $19 billion from the $25 billion value it announced based on last Friday’s closing price.
Published by Israel’s Globes Business Arena on 7 September, 2001
| Scitex Vision and Nur on speaking terms again Avishai Ovadya 06.09.2001 18:47 |
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| Nur Macroprinters (Nasdaq: NURM) and Scitex Vision are again discussing a merger, but keeping mum about it. Nur Macroprinters CEO (and ExScite)Erez Shahar said that “the company does not react to rumors,” and Meir Shani, CEO of Clal, which controls Scitex, said, “We’re not commenting on any negotiations, and our position hasn’t changed.” However, the two are conducting negotiations, which are apparently in their early stage.“Generally speaking, the merger is a good idea,” Yair Spalter of Kardan Capital Investments says. “The two companies are fighting each other in the marketplace. The merger will put an end to that. At the same time, it would have been better if the merger had taken place two years ago.
”Scitex Vision used to benefit from the marketing channels of the preprint division that merged with Creo Products (Nasdaq: CREO). Following the merger, they developed their own marketing and distribution system, and invested hefty sums. In my view, a merger was a much more attractive option at that point – far more than it is today. In any case, the two companies have already discussed a merger in the past, but it didn’t materialize in the end.” What’s Scitex worth? The failure of the merger talks is attributed to disagreement over the price. The price of Wall Street-traded Nur Macroprinters is clear, but Scitex Vision’s price is open to argument. Scitex Vision said on more than one occasion that, although Nur’s sales are bigger, Scitex Vision’s value was higher, due to its technological edge and its fast revenue growth. Scitex Vision backed up its argument with a $150-190 million valuation for an issue in Europe about a year ago. However, the issue didn’t go through, due to the market situation, and Scitex Vision went back to reality. ”Nur’s share fell due because its business somewhat declined, and its price currently reflects a company value of about $80 million. With Nur traded at such a value, while Scitex Vision is lagging a year behind in terms of revenue and market penetration, it’s clear that Scitex Vision is worth less,” Spalter says. “In addition, Nur offers a wider range of products, thanks to the acquisition of Salsa, whose cheaper products are in fact competing with Scitex Vision’s products, Nur’s second quarter sales were over $30 million, whereas Scitex Vision’s sales were $24 million. In any case, I assess Scitex Vision’s value for the merger at $50-60 million.” This may not be enough for Scitex Vision shareholders, “but in the long run,” Spalter adds, “It may be very worthwhile. There’s a very high degree of synergy between the two companies, and the whole is greater than the sum of its parts. Teaming up will cut administrative, general, sales and marketing expenses, and significantly improve operating efficiency. In addition, the price erosion in the sector due to Scitex Vision’s aggressive penetration will halt. The merged company will have tremendous power. There’s another competitor, Viotech, but the merged company will dominate the market. In my view, if the shareholders consider the long term, and realize that they’re diluting now, but holding a company whose chances of success are higher, they’ll agree to the process.” $30 billion market Wide-format printing has been affected by the slowdown. Nur issued two profit warnings in the past, saying it would not meet its targets, although it managed to break even in the second quarter. The company even expressed cautious optimism about an improvement in future quarterly results, in view of its restructuring plan, which involved laying off 14% of the staff and merging various offices. At the same time, the company’s management announced it was launching a customer-financing program with City Capital. The program could encourage small and medium-sized printing firms suffering from a credit crunch due to the tightening of credit lines on the US market, to buy new machines. “Two-thirds of the quarter have already passed, and it’s still too early to tell what the quarter will look like, because things aren’t clear at this stage,” Erez said today. “All in all, we’re still cautiously optimistic about the second half of the year. There are positive signs, but things aren’t clear enough yet. In any case, we’ve completed our restructuring plan, and now we’re a better and more efficient organization. We don’t expect further layoffs. ”We’re still optimistic about the long term. We see a consistent move from conventional printing to digital printing, and the market is worth $30 billion. We and our competitors represent an alternative to conventional printing. Our solution, which is cheaper, will eventually be adopted by the customers. The only question is how long it’s going to take.” Published by Israel’s Business Arena on 6 September, 2001 |
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| Scitex has named Yeoshua Agassi as interim chief executive officer, effective Sept. 1. Earlier this month, Yoav Chelouche resigned as president and CEO. He will continue to serve as an adviser to the Herzlia, Israel-based company until the middle of next year. Agassi will continue to serve as vice president of business development at Clal Industries and Investments Ltd., a Tel Aviv, Israel-based conglomerate that invests in various enterprises. No word yet about filling the post of president. | ||||||||||||
Wednesday August 22, 5:34 pm Eastern Time
Scitex appoints interim CEO
Earlier this month, Yoav Chelouche resigned as president and CEO. He will continue to serve as an adviser to the Herzlia, Israel-based company until the middle of next year. Agassi will continue to serve as vice president of business development at Clal Industries and Investments Ltd., a Tel Aviv, Israel-based conglomerate that invests in various enterprises. The company did not say anything about filling the post of president. Current Scitex officers (for now):
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Yoav Chelouche has announced his resignation as president and CEO of Scitex (Nasdaq: SCIX). His resignation will take effect on September 1, but he will continue to advise Scitex until the middle of 2002.
Chelouche has been appointed Managing Partner of Fantine Capital Europe One.
To see the Yediot newspaper article, click here for Hebrew.
Yoav Chelouche was appointed president and CEO of Scitex Corporation in 1995 after he had served in different executive management positions since joining the company in 1979. During this period, the Scitex Graphic Arts Group has been sold to Creo. Scitex shares have been trading sideways and recently dropped below $6 a share, the lowest point in more than a decade.
Meir Shannie, the Chairman of the Scitex Board of Directors, commented, “Yoav’s vision and leadership guided the Company through times of change and great challenges. During the past six years Yoav has been building Scitex and its management team to lead the market in inkjet based technology solutions.”
Shannie continued, “Through Yoav’s tenure, Scitex transitioned from its historic digital preprint business to be focused on digital printing. Scitex is recognized for its cutting-edge inkjet technologies and its group of companies covering a wide gamut of applications and solutions. The value in these assets will be recognized over time. Yoav has been invaluable in positioning Scitex and overseeing these major strategic steps.”
Published at www.exscite.net
source: Israel’s Business Arena at the Globe on August 7, 2001
VANCOUVER, Aug. 2 /PRNewswire/ – Creo Products Inc. (NASDAQ: CREO – news; TSE: CRE – news; ‘Creo’) today announced financial results for the three and nine months ended June 30, 2001, reported in U.S. dollars.
For the third fiscal quarter of 2001, Creo achieved revenues of $170.0 million or an increase of 4.6 percent, compared to $162.6 million in the third quarter of fiscal 2000. Adjusted earnings for Creo were $10.0 million or $0.20 per share (diluted) excluding the effect of business integration costs of $1.3 million and goodwill and other intangible assets amortization of $18.3 million. This compares to adjusted earnings of $13.7 million or $0.28 per share (diluted) for the same period a year ago. Under U.S. GAAP, Creo recorded a loss of $8.4 million or $0.17 per share (diluted) for the third fiscal quarter, and under Canadian GAAP, the company reported a loss of $9.3 million or $0.19 per share (diluted).
“Our performance was reasonably stable this quarter,” stated Amos Michelson, chief executive officer of Creo. “However, we are seeing more customers delaying purchases due to the economic climate. Given the continued weakness in the North American and European markets, we are focused on those elements of our performance that we can control – bringing strong products to market quickly and ensuring that our sales force is optimally effective. We are also implementing a worldwide initiative to reduce costs and increase operating efficiencies while continuing to manage the company for the long- term.”
Again- CreoScitex layoffs in Herzlia/Bedford/Other, one day before announcing quarterly results.
50 additional ex-CreoScitex Israeli employees will soon join ExScite. Click here to see the Hebrew news at the Israeli paper Yediot. We’ll add an English version soon. In fact we’ve heard rumors that the number of laid off is more than 200 worldwide (5% of workforce).
Michael Rolant, the new manager of CreoScitex in Israel says that the 50 employees (5% of the work force in Israel) are laid off “to streamline the local activity to the current world market conditions”.
Of the 50 employees, 15 are permanent positions and 25 are hourly workers.
It is also rumored that 40+ people are to be laid off in the Bedford office (mostly from MIS and Customer Service departments).
This looks like another financial exercise, one day before announcing the deteriorating quarterly financial results; click here to see more Creo Products, Inc. Earnings Call scheduled for Thu, Aug 2 .
As reported, Scitex is trying to dump its holdings at Creo, perhaps selling its shares to the German giant Heidelberg; click here to see more-Will Heidelberg be the buyer of the Scitex holding at Creo
| The original holding at Creo was evaluated at the time at $640 million shrunk by 65% to approximately $223M. In addition, Scitex pulled out and wrote off investments in Vio, Karat and PrintLife. |
| (July 22, 2001) The Scitex Corporation (Nasdaq:SCIX) is in preliminary talks to sell its 27% stake in Creo Products (Nasdaq, CREO, TSE:CRE) to press manufacturer Heidelberg Druckmaschinen, reports the Yedioth Ahronoth newspaper. The paper adds that should the deal not take place, Scitex could consider spinning off its Creo holdings to the firm’s shareholders. Sources close to the Scitex management told the paper that at present the contacts have not matured into an agreement. Scitex’s decision to sell its stake in Creo is part of its reorganization, in which it plans to focus on the digital print business. For Hebrew article at the Yedioth Ahronoth newspaper click on http://www.yedioth.co.il/articles/0,7340,L-941508,FF.html . The original holding at Creo was evaluated at the time at $640 million, but the steep Nasdaq decline affected the printing companies’ shares also, and the value shrunk by 65% to approximately $223M. In addition, Scitex pulled out and wrote off investments in Vio, Karat and PrintLife. |
| Funding for www.vio.com comes from a group of former Trinity Mirror managers. Andrew Hood, US Operations Manager. Miranda Clegg will lead the marketing efforts out of the UK. |
| They’re Back, VIO Resurrected with New Funding
7/4/01 – (Source: PrintPlanet.com) According to sources familiar with the company’s financial condition, VIO has found an investor to continue the company’s operations. England based VIO www.vio.com is a file transfer company working with organizations in the print and graphic arts industry. PrintPlanet.com reported on April 13th, that VIO would cease operations by the end of the summer. Sources said the company had experienced significant losses and was unable to attract the needed funding to continue the operation. Scitex, who owned a portion of the VIO with British Telecom, said in February that they would divest of their shares in anticipation of a management buy out. An agreement was never reached. VIO had sent letters to customers explaining the shut down. The letter stated that VIO “would continue operating it’s core service until the end of June and provide basic Internet service until the end of July.” Sources say the funding comes from a group of former Trinity Mirror managers who have an interest in the secure distribution of data and information. Andrew Hood, US Operations Manager for VIO told PrintPlanet.com today that everyone is very excited. “Much has happened in the last week as you can imagine. We have been waiting on this for a while.” Hood said Miranda Clegg will lead the marketing efforts out of the UK, but many of the structural decisions have not been finalized. “We have a small staff in the US, but the management team is in the process of making offers to keep many of the employees.” The secure, file transfer business has been under great pressure recently with uncertainty about Wam!Net and the closing of DAX. However, DAX was purchased by Torque and Wam!Net says they will secure their needed funding. Other companies in this space, GroupLogic and FileFlow have reported solid growth in recent months. GroupLogic and FileFlow both fired out “VIO Conversion Program Press Releases” as soon as VIO announced their potential shut down. Hood says they are not worried and VIO would be back to business as usual. “We know we will continue to offer products and services in the UK, France and North America. With this investor group comes a full research team that will add much credibility to our services. We hope to show our strength and capitalize on the recent struggles companies in this space have experienced.” |
CreoScitex one year later. Poised for market domination? (Seybold Reports)
When Creo Products acquired the Scitex preprint division early last year, many wondered how the two former competitors would combine and whether they could devise a coherent strategy. The article was published in a recent Seybold Report. (1MB PDF file) Read it here
(Aug 22, 2001) Scitex Corp. Ltd. (NasdaqNM: