News

Dor Ventures is headed by Arieh Rosenfeld, former CEO of Scitex Corporation (Nasdaq:SCIX), and Ilan Neugarten, who has held senior positions in Scitex.

RealTimeImage was founded in 1996. It has developed Internet-based imaging technology for the graphic arts and for medical imaging.

The fact that Dor Ventures has become a strategic partner in the company is certainly significant to RealTimeImage, as Dor Ventures specializes in companies that focus on electronic publishing, Wed-based printing applications, imaging technology, and digital printing.

The present round attracted RealTimeImage’s existing investors, among them Intel 64 Fund, the venture capital fund of Intel (Nasdaq:INTC), Scitex, Newbury Ventures, and TDA Capital Partners.

Other shareholders in RealTimeImage are Citicorp and ComSor Investment Fund, a joint venture capital fund of Comverse Technology (Nasdaq:CMVT) and Soros Management Fund, owned by mogul George Soros. Dor Ventures’ investors include photography products giant Agfa, German printing equipment company Heidelberg, and Scitex. The fund has to date raised $35 million out of a planned $60 million. Source: www.themarker.com Dec 1, 2000

If there’s one thing that highlights the difference between the ritzy hi-tech zones of Tel Aviv or Herzliya Pituach from the rest of the nation, it’s the penguins.

What penguins, you may ask. Did they escape from a local zoo?

No, they’re the visually attractive marketing fiasco dreamed up by the Gitam advertising agency.

Can’t you just see the scene. The creative director of the ad agency turns to the hi-tech CEO with eyes aglow, snaps his fingers and announces, “Boy, do I have an idea for you.”

“Okay,” sighs the executive. “I’m listening.”

“Envision this,” the art director says, waving his arms about. “Two hundred penguin statues, each seven feet tall and weighing two tons. Each will be decorated by a different artist. Then we’ll strategically place the penguins around the country. And the best part,” says the art director, getting his limbs under control and pointing dramatically at the CEO for emphasis, “is that it won’t cost a penny more than a million dollars!”

“Wow,” says the CEO. “Outa sight.” He turns to his faithful human resources and marketing managers. “Waddaya say?”

“Intriguing,” mutters the marketing manager.

“Whee,” the human resources manager helpfully clarifies.

Penguins? A case of DTS or a marketing ploy?
The above scenario sounds about as likely as walking out of a Tel Aviv beach hotel and finding flightless fowl waddling down the boardwalk leaving the aroma of herring in their wake. Exactly what message do 400 tons of penguin sculptures convey about an Israeli hi-tech company that manufactures advanced equipment?

Gentle reader, although we don’t really know the details of their meeting, the bottom line is Gospel. Gitam convinced CreoScitex, of the Scitex Corporation (Nasdaq:SCIX), to scatter festooned fake penguins about the greater Tel Aviv area.

Forget the how. Why? Scitex sells mainly in Europe and the United States. It’s a serious company facing huge challenges and not in the best financial shape. Why should it spend a cool mil on decorating Tel Aviv with penguins? Is it mad?

No, Scitex isn’t mad. Israeli hi-tech is mad. The fever engulfing the hi-tech industry may have gone to Scitex’s head. But most marketing managers at its competitors were probably smacking their foreheads. “Penguins! Cool!” they berated themselves. “How can we counter that? Hey, whaddabout dolphins?”

A new concept of recruitment
Actually, the penguins campaign was meant to address a problem not entirely self-evident from the nature of the beast: the manpower crunch, caused mainly by a cultural change. And most of the hi-tech giants are in the same boat as Scitex. To keep their staff on board, they have to fork over not only profligate salaries and perks, but thrills too. The riches raked in by a few thousand people generated unrest throughout the industry. Everybody else feels they’re missing out, that they aren’t at the forefront, and naturally, they want stock options too to turn them into millionaires, and they don’t mean in 20 years’ time, thank you.

Scitex was hard-hit by the manpower crisis. First of all, it’s a big company in the unsexy printing business. Secondly, its stock has slid 30% in five years. This market cap of the veteran company, with a staff of 3,000, dropped to $400 million while some baby startups are going for billions. The workers for their part are as capricious as the markets, abandoning solid but stolid enterprises for ventures in their infancy, as long as they’re exciting. They tend to stay loyal to the old company only when its stock is powerful, as is the case of Check Point Software Technologies (Nasdaq:CHKP) and _Comverse Technologies (Nasdaq:CMVT), for instance.

Well, do the penguins somehow represent a fundamental change in the jobs market? Ownership and power shifting to workers, maybe? Or do they perchance represent the sick situation of the capital markets, willing to finance only sexy startups?

The truth is evidently somewhere in the middle. Workers will continue to be a scarce commodity, the structure of companies will change, and they will spend fortunes on sprucing up their image. As startups start collapsing, workers will remember the charms of mess halls with 2,000 hi-tech workers stuffing their faces and leaving at five, compared with spaghetti and truffles and working round the clock, only to lose their jobs and join the penguins in the street.

Wouldn’t say boo.com to a goose 
Meanwhile, the paint melting off the penguins broiling under the Middle Eastern sun brings to mind that their rightful place is the South Pole, and that Israel’s globalization includes global problems, which do not include the relocation of fowl. Startups are canning staff the world wide, and it didn’t begin or end with the ultraclassy website boo.com. Last week Israel learned of five local startups slashing staff. The most frightening was Yazam, the startup launchpad, which took over Britain’s First Tuesday. It, for one, is headed by leading figures in the hi-tech and startup industry, but it too is in trouble.

The one aspect that hasn’t changed is that demand for skilled manpower is still strong. Growth is slowing, Israel has plunged back into political turmoil, companies and startups are slashing staff, foreign investors are staying away, yet technology is advancing, research and development must go on and demand for talent far exceeds supply. Classified ads, recruitment campaigns, banner ads, stock options, repriced options in the case of companies whose stock has dived by double-digit percentages: Companies are grasping at anything to grab attention. Even two-ton statues of penguins.

Announcing New MD for CreoScitex Europe

We are pleased to announce the appointment of Alon Lumbroso as Managing Director of CreoScitex Europe. Alon is currently Managing Director of CreoScitex Asia Pacific. Alon has had a long career with Scitex Corporation, which he joined as a student in 1985. Since then he has held a variety of positions in operations, sales, marketing and management. Alon has worked in the Asia Pacific region for the last 4½ years: responsible for the region for Scitex for 3½ years, and most recently for CreoScitex. The timing of Alon’s transition to the Brussels office has yet to be determined. His successor for the Asia Pacific office will be announced shortly. Please join us in welcoming Alon to his new position.

By Aviva Rosen

DRUPA 2000, the global print exhibition currently taking place in Germany sets the agenda for the print world. If you are not there, you don’t exist. Some conclude the deals of a lifetime by having their products perfectly displayed, and some are there with new products, but which are poorly exhibited, and thus missed by potential customers.

One company that is there with glad new tidings is Creo-Scitex , a merger between a division of Israel’s Scitex and Creo of Canada. The merger was worked out in January but not finally signed until April, leaving the two companies very little time to organize and arrive at DRUPA with a common message.

Creo-Scitex president Erez Meltzer, pre-merger vice president of Scitex, tells how quickly this was achieved. In an age where work on mergers takes years until the companies discover whether the merger has been a success or a failure, such speed can only be achieved if everybody acts in unison toward a single goal. And that, in fact, is what happened. The employees of both companies realized that unless they acted jointly, both parent companies were liable to collapse and they would lose their jobs.

When mergers happen, Meltzer says, many employees become anxious, for fear of losing their position. There are personal and group interests that have nothing to do with the interests of the organization. “In our case,” Meltzer says, “these fears were put to one side in favour of the common interest of putting in a united appearance at the exhibition.”

Meltzer: “There exists quite a large cultural gap. One the one hand, there is a global entity such as Scitex, in which 70% of employees, mostly Israelis, worked geographically dispersed all over the world. On the other hand, there is a Canadian company, with a typical North American mentality. All that remained to the new company, in terms of time, was five weeks of intensive effort to enable us to come fully prepared to DRUPA.

“The merger was finally concluded in April, and by mid-May, we were already prepared to inaugurate our pavilion at the exhibition, and present ourselves as a united company with a product line representing a combination of the products of the two component companies. We had to present a uniform concept, uniform design, people who identified with the merged company and would present it as such. This involved millions of tiny details carried out by people who didn’t sleep for weeks, in order to come ready to the exhibition.

“Ultimately, we have 150 products at the exhibition, a pavilion occupying a huge area of 2,000 square metres. Our equipment is positioned in another fourteen pavilions belonging to other companies. Incidentally, for PR purposes, we distributed 25,0000 footballs with our logo. Every two hours, thousands of these footballs are tossed down from an elevated position, to tell the world that Creo-Scitex is here”.

“Globes”: Did there come a time when you were afraid of not being able to keep up with the murderous pace of your timetable?

Meltzer: “Firstly, we drew up Plan B to have something to fall back on in any event. If we could not come united to DRUPA, we would appear there anyway, as two separate companies. However undesirable, that would be better that a unified appearance of less than the highest standard”.

The hard work involved took place concurrently on three continents, by means of telephone and computer communication, with ceaseless efforts to synchronise everyone’s clocks, due to time differences. For that reason, most activity took place in the afternoon hours Israel time, which is morning in western Canada.

The first thing the merged company attended to was internal communications. From day one of its activity as a merged company, it had a uniform e-mail system with uniform Intranet.

Just one basic message was relayed to employees: here and now, we have something entirely new, neither Scitex nor Creo, but a new creature. Meltzer: “We created a new logo. We even painted the company’s access road in the logo colors of red and blue. That very day, we changed the logo in all the company’s sites worldwide, and all answer machines replied: ‘Hello, Creo-Scitex here'”.

Due to our crowded timetable, management in most cases gave employees a free hand in decision-making. We enabled people to surge forward and do their utmost. We got across to them the message that we relied on them really to put the company interest first, and they came through for us”.

Also, cultural and conceptual gaps among the people setting up the pavilion itself had to be bridged. They were a German designer, a Dutch designer and an Israeli graphic designer. Together, despite coming from different places, they had to shape the company’s uniform message. Meltzer: “It transpires that the task, and possibly also the tight schedule, managed to unite everybody, even though there were differences of opinion here and there. Yes, with all the difficulties, short-term goals also carry distinct advantages”.

Meltzer notes that the first people who had to be recruited in the interest of the common goal were managers. “When the managers ‘believe’, they transmit they faith and optimism to the entire company”, he explains.

It is already apparent that one of the big advantages of the merger is that Creo-Scitex is perceived by potential customers as more of an international company than Scitex. Consequently it is more open to new markets, such as those in the Arab countries. Meltzer: “Two days ago, a Syrian customer came to our pavilion, making enquiries about a possible equipment purchase. That is an achievement of a type we could not have reached in the past”.

Published by Israel’s Business Arena on 25 May 2000

Scitex Announces First Quarter 2000 Results

Herzlia, Israel, May 11, 2000
Scitex Corporation Ltd. (NASDAQ: SCIX) today reported its results for the three months ended March 31, 2000.

Creo Scitex Transaction

Following the closing of the transaction between Scitex and Creo Products Inc., reported last month, the following results represent the final publication of the consolidated financial statements of Scitex which include the business merged with Creo. Since the transaction closed after the end of the first quarter, the full impact of the transaction, including the resulting capital gains and all transaction expenses, will be included in the results of the second quarter of 2000.

Quarterly Highlights

Revenues for the first quarter of 2000 were $163 million, up 4% on the comparable quarter in 1999. Operating income was $7.3 million, down $700,000. As could be expected, the pendency and uncertainty of the Scitex/Creo transaction negatively impacted the performance of this business in the quarter. The digital printing businesses grew to $53.2 million, a 29% increase compared to the parallel quarter of 1999.

Net income for the quarter was $1.3 million or 3 cents per share. The weak euro and the strong shekel had a negative impact on the quarter’s results. Net income from continuing operations in the first quarter of 1999 was $2.6 million or 6 cents per share. In that quarter we also showed a gain of $5 million from discontinued operations resulting from a reduction in reserves associated with the Company’s sale of its digital video business.

The New Scitex

In a separate release issued today, Scitex’s management described the new positioning and strategic direction of the Company. It is based on the concept of Scitex building a network of pioneering companies which bring together digital imaging technology with the power and reach of the Internet to offer exciting solutions for the graphic arts and digital imaging markets. The remainder of this press release describes the recent performance and events for Scitex’s operations and investments in the digital preprint, digital printing and Internet markets.

Scitex’s digital preprint business, which was merged with the operations of Creo Products Inc., as of April 4, 2000, to create the CreoScitex organization, recorded revenues of $106 million in the first quarter of 2000 compared with $113 million in the first quarter of 1999. The performance of this part of the business was affected by the uncertainty regarding the transaction with Creo between the signing and the closing. Going forward, Scitex’s participation in the digital preprint business will be through its 27% equity investment in Creo. We believe that once the integration has been completed, CreoScitex should generate high levels of growth and profitability. The market value of this core holding was $424 million (approximately $10 per share) based on the closing price on May 10, 2000. Creo Products Inc. is a world leader in digital preprint and on-press imaging technologies.

Scitex Digital Printing (SDP) posted a modest growth in revenues in the first quarter of 2000 with sales of $35.9 million compared to $34.0 million for the same period last year. Sales of the Scitex VersaMark� , introduced in the first quarter of 1999, expanded during the period as the new technology base gained greater acceptance and appreciation amongst existing and potential customers. Sales of the new Scitex VersaMark products already account for more than 60% of equipment sales in the quarter. The company shipped a multiple system to British Telecommunications plc that included eight Scitex VersaMark digital printing systems. Earlier this month Scitex announced the launch of the VersaMark Business Color Press� , the first ultra high speed digital color press, and its installation at Be’eri Printers, one of Israel’s premier commercial printers.

Scitex Wide Format Printing revenues for the first quarter of 2000 rose 139% to $17.3 million, compared to the parallel quarter last year. All products of this subsidiary experienced healthy growth in the period with super wide format sales being particularly good. Scitex is now a leader in this rapidly growing area of the printing market. Towards the end of the quarter, Scitex and 3M entered into a strategic alliance that includes joint development, distribution and support. At the same time, Scitex Wide Format announced the launch of the Scitex Pressjet� 3M digital press integrating Scitex equipment with 3M inks, graphic films and software. Sales of the Scitex 3M Pressjet digital press are expected to commence in the second quarter of this year.

Karat Digital Press’s beta program for the 74 Karat™ short-run, color, digital offset press was expanded, bringing the total number of units installed at customer sites to ten. It is anticipated that commercial shipments will commence after the end of DRUPA. During the first quarter of this year Karat Digital Press, North America, Inc. was established to facilitate the sales and marketing, and customer support operations in the USA.

Vio Worldwide Limited, an applications service provider (ASP) for the graphic arts industry, is Scitex’s 50/50 joint venture with British Telecommunications plc. The latest quarter saw the JV further expand its services while growing its customer base. The new Internet-based technology is gaining broader acceptance and Scitex continues to invest in this exciting, value creating venture.

Yoav Z. Chelouche, President and Chief Executive Officer of Scitex, said, “Now that the CreoScitex deal is completed we are continuing our pursuit of new technologies and applications in digital imaging, graphic arts and the media. Under Scitex’s new strategy unveiled today, we are actively building a network of leading, innovative companies focused on combining digital imaging technologies with the power of the Internet which offers tremendous opportunities in business communication. Only through our commitment to add value within our network of companies will we be able to reap the benefits of their specialized knowledge and leverage our management strengths.”

Rimon Ben-Shaoul, Chairman of the Board of Scitex Corporation Ltd. added: “The Board of Scitex is determined to unlock the hidden value of the Company by implementing an active and dynamic strategy.”

Chelouche concluded: “We bid farewell today to Eyal Desheh, Corporate Vice President and Chief Financial Officer. On behalf of the Scitex Board of Directors, senior management and its employees, I would like to thank Eyal for his tireless efforts over the past three and a half years that he has worked with us at Scitex. I wish him success in his future endeavors. We are currently seeking a replacement for Eyal. In the meantime, Itai Halevy, Corporate Vice President Business Development & Strategic Planning, will assume overall responsibility for the finance function at Scitex.”

SCITEX CORPORATION LTD. (AN ISRAELI CORPORATION) AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(U.S. Dollars in thousands, except per share data)

SCITEX CORPORATION LTD. (AN ISRAELI CORPORATION) AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. Dollars in thousands)