Pierre, A very well written and thought out first post on Sil. Inv.
You have put a lot of time in for someone with a "few puts" but I commend your detail and opinions.
However, I have questions and comments regarding your thoughts and concerns and your thoughts as to the general direction of the print industry. I have also researched this company and have spent much of my recent time and money visiting a few sites that are up and running with PRST plate technology and interviewing the printers using Quickmaster DI and others using the Pearl platesetters. To a man, they do not agree with your assessments.
Taking each of your 13 points:
1. Patents....PRST feels confident that they have properly protected their present technology with secure and unbreakable patents and will vigorously defend those patents if needed. In a recent press release, Presstek stated, "Specifically, with respect to our business, we have forty-eight patents issued in the U.S. (sixty-two worldwide), containing more than 1,000 claims. Only one patent is being reexamined, and that is at the Company's request. Only one patent is being reissued, again at the Company's request. None of our patents are in dispute. None of the Company's products "CURRENTLY BEING PRODUCED" rely solely on patents either being reexamined or reissued."
Heidelburg presently has an exclusive agreement with PRST. If in fact other "sources" from Fuji, Kodak and Polychrome have informed you that they have been contacted by Heidelburg, I would ask that you provide me the names and locations as I would like to verify this. (I will E-mail you.)
I spoke to Heidelburg, they laughed and stated they are very satisfied with PRST and are not looking to outsource.
2. I have your official projection....they expect to increase production monthly with a minium of 40 per month by the end of Q2, 1997. They have "solved" any early problems with initial units and are aggressivly expanding their production capabilities to meet an increasing order book for Quickmaster DI's.
You claim that PRST has shipped 195 kits to Heidelburg....you left out that PRST has orders of 100 additional kits to be delivered by the end of the year 96. Based on your post, I cannot imagine what they could be for! PRST anticipates they will be able to meet the demand. With the increase in production, it seems your math just doesn't add up.
3. Pierre, you seem to ignore that the industry is changing from the traditional chemical/film procedure to a non-photographic, toxic-free, digital imaging and printing plate technology. The future for printing is represented in the present and future moves by printers to Computer-to-plate and direct-to-press technology. The cost savings, client demand, and competition in the market place necessitates it.
I am interested on how the potential impact the two typo's of PRST competitors names, might have bearing on the production of PRST technology and the manufactur of future Heidelburg Quickmasters and PEARL platesetter conversion kits? For owning a few "puts", it seems you are stretching considerably in an attempt find and then link typo's as an example of PRST incompetence. Their undisputable record growth in sales and huge increase in quarterly income, speak very well for their marketing ability and acceptance by the industry. I am sure that the entire engineering and design staff of PRST prepared pages 15 and 16 of the 10Q.
4.I expect that the back order was disheartening to those printers that requested a Quickmaster from Heidelburg and had to wait for their turn. If John Tooker's wait of 1.5 years from order to delivery is any indication of other printers facing similar delays, I would not be surprised if some found another Press that would meet their immediate need.
I expect that this is common in any industry when a new product is introduced to the market. Discouragement and cancellation. It seems this may take care of itself, as deliveries in the US begin and Heidelburg increases production as demand begins to be met.
It has been interesting to cruise the net and note the many printers that state in bold letters on their home page.... "Heidelburg Quickmaster DI on the way" or "We have the Heidelburg Quickmaster DI".
5. On point 5.....I totally agree and believe PRST is paying the price now for saving a dollar earlier. Spoke with a couple of accountants that stated that for the size of the company of PRST, they should now have in house CFO. Will be interesting to see if that develops soon.
6. In regards to your patent statement, "anything that Presstek has subsequently done in asking the patent office for a re-examination of
the crucial plate technology patent has been a direct result of the arbitration process, not simply at the company’s request as reported by the company. Sounds like a lawyer splitting hairs here." I fail to see the connection to Agfa here. PRST in Press Release states: While
we are still involved in a previously disclosed arbitration with AGFA
Gevaert concerning certain trade secret and contract matters, these
proceedings "DO NOT INVOLVE" the validity of our patents. The Company
continues to believe that its patent and intellectual property position remains strong." You state that the PRST asked the patent office to reexamine "The crucial plate technology" PRST states that the re-examination of a patent does not affect products "CURRENTLY BEING PRODUCED". PRST products, currently being produced DO NOT rely solely on patents either being reexamined or reissued."
Pierre, If you have information that provides for your contention that AGFA dispute is anything more that what PRST states it is, please post it in more detail and state specifics for your reasons.
7. So PRST does not practice "age discrimination". How old are you Pierre? Should everyone over age 60 be in a nursing home? Do they become non-productive? Someone there produced the know how to win the print industries awards for innovation and technology. Probally some young college kid! The oldsters are no longer capable of managing companies. Pierre, you have some good comments and some that are grasping at straws that discredit your good arguments!
8. Once the operation of the press is learned, the normal skills used by the traditional printer operator is not needed with the Quickmaster. Your statements that: "less operator skills are not what is needed here. In fact, due to it’s nature, the QM-DI requires more skills in some ways as the press operator also needs to be well versed in the digital domain as well!" "In fact one requires at least five years of Adobe Postscript outputting desk top publishing files in order to receive a QM-DI in the initial rollout."
Pierre, During the last 3 trade shows, there featured many detailed and in-depth discussions that were focused on the direction of the print industry. These were transcribed and placed on the web. They addressed this issue. All agreed that the old technology is fast becoming a dinosour. All stating that the computer is the future and that the operators will be required to not consider themselve as "printers" any longer, but computer operators. Regarding the cost savings and requirements for digital computer-to-press and direct-to-press operation there were many positive views by printing company owners already using the technology. Of all printers commenting, there was agreement that they had all been able to save substantialy with this new technology and also cut the normal print shop staffing to less than half. (I will post this information if you request, there are pages of it.) The print shop hires a skilled individual with the new Postscript training. This person then assisted in providing effective and additional training to other existing employees. Times are changing Pierre.
9 and 10. I have no infomation to dispute your information and this may in fact be very accurate. I expect that these markets will be pursued and the technology developed to provided service to these areas after the existing demand is met in countries that present no language barrier. Does not postscript act as an interpreter to language difference?
11. Yes, Heildelburg passed up the 19 x 26 inch format. I have recently learned from the local Heildelburg Center within 20 miles of me, that they are interested in future use of the 40" press for PRST technology. (See prior post.) As you know, it is the short run of 200 to 2500 copies that is the focus of this technology and the true cost savings for the printer. You state that Adast is known for their cheap presses. Well, a quick scan of printers home pages tonight show their equiptment and presses. If they are so cheap, why do so many own Adast presses!
12. Until I see these so-called class action suits develop, I don't have much concern. I wouldn't be surprised to find many of them shorted the stock prior to the recent announcements, (much to their dismay.) PRST states in numerous press releases that there is no merit to any of the claims filed. They state the negative news that has fueled the bogus suits are "derived from misinformation in the marketplace and that the suits cite previous news stories as support....PRST states "that in fact the press stories are based on illinformed sources. This has led to stories that are characterized by inaccuracies, incomplete information and incorrect innuendo. Prior releases have stated the information as being totally inacurate rumor, false allegations, bogus allegations etc. Who said the short position isn't powerful?
13. Ah yes...is it any coincidence we stop at lucky number 13? By the standards you use to value PRST, it is a wonder that so many printers own PRST stock not to mention 20th century and 56 other institutions. They do not own the stock today on the hopes of a buyout at their present market value. This stock was traded based on the values that it will demand, 3 or 4 quarters in the future. We obviously are basing our opinions on different research.
Pierre, I doubt there are many that have spent the time and spoken with those that are actually using the prst plates and the Heidelburg press. I truly believe the company does have the technology to succeed in a big way. Time will tell. I have to wonder why the trading of this stock, with all the recent negative news, continues to remain at this level? Why hasn't the stock tanked? If there is no future here, why have there not been the large trades? Mention is made of accountant that sold 3000 shares of his PRST stock! Give me a break! He probally was smart enough to see the power of the short poition and made some cash here. Wouldn't be surprised if he recently bought back and now has 9000 shares! Heck, he probally was one of those old useless gentlemen....getting ready to retire....
Well, Tuesday is another day! Let's get this stock over 70! Today largest trades were three 9,000 share buys. Could not pick out a sell over 1000 shares.
Take Care All...
Neil |
