Ri$ky, I was most surprised at the initial reception Creo received in their opening day of trading. Although most IPO's will perform very well at the onset, due to underwriters desiring a good showing, the next couple of weeks will be most revealing for Creo stock.
I also am very familiar with the Creo technology and will be first to admit they have produced fine Off-press computer to plate technology that permits many printers to laser image a plate digital, rather than analog and still use their existing traditional presses. Their JOA relationship with Heidelberg has assisted them greatly in manufacturing and marketing their products and increasing their revenue sufficiently to bring their company public.
As a Presstek shareholder for 5 years, I have observed their growth with interest, however, readers of this thread should be aware of certain risk factors associated with Creo that I believe are most crucial to ownership of the stock.
1. The relationship with Heidelberg is critical to Creo's survival as a leading provider of CTP platesetters. This relationship could be terminated by Heidelberg. Should this occur, Creo would face most difficult times.
2. There are currently many competitors in CTP with more coming as clear need exists for a few years for a CTP bridge technology that permits traditional press usage in a digital format by the use of a platesetter. However, most industry experts......including Heidelberg, publicly state that all existing and new presses offered for sale by all press manufacturers, will provide direct-on-the-press laser imaging by 2008. CTP is considered by all (even Creo) as a bridge between current traditional presses and the new on-press technology. The need for CTP will wind down quickly as on-press imaging (CTP on the press) alternatives are offered at prices less than current stand-alone platesetters currently sell for today. In other words, who will want to purchase a CTP platesetter when the press and laser technology can be provided all in one at low prices?
3. The most important question requiring answers for you as a new Creo shareholder and myself as a Presstek shareholder, surround the ownership, development and the use of on-press technology, as it is truly the future of the printing press. Creo was recently notified by Presstek attorneys regarding Creo's use of on press technology patents. (See recent press release) Presstek claims Creo has directly copied their on-press patents to develop the Heidelberg Speedmaster 74 DI press. Presstek today, again publicly stated this position in their quarterly conference call and have given their attornies the nod to proceed in protecting Presstek's intellectual property. Should Creo lose this ability to provide on-press laser imaging and are not granted a license for the use of the technology from Presstek, due to their infringement, Creo stands to lose ability to remain a major player in the industry. Should Presstek grant the license, it will only come after Presstek technology use is fully admitted by Creo and the logo "Presstek Inside" appears prominently on any on-press product Creo provides. When this transpires, what manufacturer will use Creo to obtain their on-press imaging technology? It would seem that using Creo would require a royalty payment to Presstek, making their product more expensive. Would they not just go to Presstek first for on-press and eliminate Creo as the middle man? Presstek believes so.....and so do most Presstek shareholders. Note that Presstek press release today, states that all press manufacturers have been notified that the on-press patents that Creo challenged with the US patent office were all reaffirmed in Presstek's favor.
4. Direct polymer technology.......This process is another on-press technology that eliminate the plate and places a polymer coating of media (thermal polymer material) directly on the plate with the theory that the plate can be wiped clean. Man Rolland and Creo have been working on this project for some time. Nearly all plate providers have attempted to provide this technology in the past spending million in the attempt to develop an acceptable product. All have failed and completely abandoned it, finding that the press room enviroment was not conducive to the requirement of a "clean room" "lab" setting due to the paper dust and other debri in the air causing many imperfections in the printed product. Also, the corrosive chemicals needed to remove the imaged material off the cylinder after imaging, could not be properly controlled. Any proto-type designed was found to be to non effective and cost prohibitive, based on the lower cost of plates today and the high cost required to provide a clean enviroment for the press. In anycase, it is believed that Presstek also controls this technology as it is laser imaged on the press, just like a plate.
Currently, all on-press technology by all current manufacturers of on-press providers, have licensed the technology from Presstek or are purchasing the laser imaging systems directly from Presstek. This includes Heidelberg for the Quickmaster DI, Omni-Adast, Scitex, KBA, Alcoa, Nilpeter, and 5 additional major press partners, as yet undisclosed developing secret on-press technology at Presstek facilities in New Hampshire to be shown at DRUPA in May of 2000. It is believed that all of these companies attempted to bypass Presstek on-press patents prior to approaching Presstek, and were advised the patents were ironclad with no loop holes by their attorneys.
I will assure you of this.....if Creo is somehow successful in breaking Presstek's patents, I will load up on their stock, as on-press is where Creo must go to be successful in the future. Until the patent infringement is decided, I would not buy any of the Creo stock.
BTW, Presstek will be providing a new platesetter line utilizing their new laserhead technology, for off press platesetters on both small and large format sizes. It is expected these new platesetters, to be shown at DRUPA, will include new state of the art automation as well as the new lasers in all format sizes and at considerably reduced pricing below the current Creo products. Certainly something else to consider.
Neil
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