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Will the sale of SDP to Eastman Kodak spell the end of Scitex as a brand? Andrew Tribute asks This article is written about an event that has not happened, may not happen, but in my opinion is very likely to happen. We have just had the announcement that Scitex Corporation is to sell its Scitex Digital Printing (SDP) Operation to Eastman Kodak. SDP provided 65 per cent of all Scitex Corporation revenues in 2002, and all of its profits. SDP is also the only company 100 per cent owned by Scitex Corporation. Homi Shamir, the CEO of SDP is also president and CEO of Scitex Corporation, and he will stay with SDP when it becomes an Eastman Kodak company. What remains within Scitex Corporation following the sale of SDP are investments in a number of companies, but no wholly owned operations. The principal one is Scitex Vision, the company. 75 per cent owned by Scitex Corporation, created by merging Scitex Wide Format Printing with Aprion. Scitex Wide Format was established in 1994 as Idanit, and acquired by Scitex in 1998. To my understanding, it has been almost continuously loss making in that time. Aprion was established in 1999 as a spin off from Scitex’s Advanced Printing Products Division and makes piezo drop on demand ink jet printheads and products. It has been hugely loss making and has to date accumulated losses around US$60million. Scitex Vision has annual revenues of around US$85million. Scitex Corporation has investments in a number of other small or start-up companies, none of whom trade under the Scitex name.What I believe will happen once the sale of SDP is completed is that Scitex will disappear as a brand, as the Scitex investors sell off these remaining investments to other organisations. My reason for this belief is one has to look at the history of Scitex and its ownership. Scitex is a publicly listed company on NASDAQ (Symbol SCIX), but a large share of the company’s shares are held by two Israel-based investment companies, Clal Industries and Discount Investment Corporation. Between them they hold 44 per cent of the shares. These two companies are owned by IDB Development Corp, and members of the Recanati family own more than 50 per cent of IDB’s shares. This ownership structure has changed very little over the past decade. Prior to this time there were other significant investors in the company including the infamous Robert Maxwell, who was Chairman of Scitex Corporation in the late 1980s.
From discussions I have had with various members of Scitex over the past years, including previous CEO’s of the Corporation, the investors have not been happy with the financial returns of the company since the early 1990s. If you have been around long enough you may recall that Scitex’s golden age was the 1980s, when they created and led the digital colour prepress market. In those days a colour workstation would cost up to US$1million. At that time Scitex was a hugely profitable company. In the same fashion as other leading companies in the same market at that time, Scitex totally misunderstood the changes coming from the Macintosh, desktop publishing, and out of the box computer technology, and rapidly went from large profit to large loss making operation. The investors have not been happy with the financial performance since then and have progressively exited many of the markets they have operated in. As examples of this, in that time they have sold or simply exited agreements with British Telecom for Vio, KBA for Karat Printing Company, and have closed Scitex Digital Video a company it acquired for around US$70million, and which never made a profit.
The major sale was of the Digital PrePrint Division to Creo in exchange for 35 per cent of Creo shares. My perception of this deal was that Scitex’s major investors saw that 35 per cent of Creo would be worth substantially more than 100 per cent of Digital PrePrint. It would allow the investors to sell the shares at a substantial profit. Unfortunately the mishandling of the merging of Creo and Scitex operations generating the dispute with Heidelberg caused the Creo share value to fall substantially. The result was that over the next two years as Scitex progressively sold its shares in Creo it made no profit on the deal.
Scitex’s investors have been looking for almost a decade to get out of the low financial return technologies which the company has invested in. I see that the final elements in this disposal will soon take place, and the Scitex brand will no longer be with us.
This brings me to part two of this article and that is to say thank you to Scitex for its fantastic involvement and impact in changing the graphic arts industries. I have watched Scitex now for almost 25 years. I have competed against them, consulted for them, written about them, and made friends with many of their employees. Above all I have respected them immensely. I first saw them in 1979 at the GEC exhibition in Milan. There they showed the first Response digital colour prepress system. Watching that demonstration, given by a certain Efi Arazi, the company’s charismatic and dynamic founder, was awe-inspiring. I saw the whole graphic arts industry changing in front of my eyes. Efi Arazi was a genius and he drove the company forward, but had great people around him to manage the company and develop the products. In terms of developments, Scitex introduced digital colour prepress to the world. It pioneered the use of flatbed CCD colour scanners as an alternative to drum scanners. It largely created digital colour workflow. It created the market for digital colour camera backs with its Leaf technology. It changed the colour proofing market with its Iris technology using continuous ink jet printing. Despite losing out to the rise of desktop publishing technology, it showed just what could be done by being the first company to use XTensions to make Quark XPress work in the high-end colour world. It essentially created the large format (eight-up) computer to film market, and was a major player in all other formats of CTF. It did early pioneering work in computer to plate, but only came late to the market with its successful Lotem products. It also showed that it could take a product given up by another company and turn it into a world market leader. That is when it acquired the Diconix operation from Eastman Kodak and created Scitex Digital Printing. Scitex saw something that Eastman Kodak could not see on what could be done with this technology.
The legacy of Scitex however will not just be seen in what was done within Scitex Corporation. Ex-Scitex employees can be found in almost many companies within the graphic arts and other industries. The most successful company that evolved from Scitex is EFI, a company founded by Scitex’s founder Efi Arazi. One only has to look at almost any company in graphic arts to see Scitex alumni continuing innovative brilliant work and creating fantastic technology and products.
Whatever happens in the future, Scitex for me will always be the company that did most to change graphic arts and bring the industry forward to be a leader in the implementation of digital technologies.
"Thank you Scitex."
Andy Tribute is a world-renowned print media journalist and delivers insight on the industry around the globe, as well as new technology movements. He is based in the UK.
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