To All; A Shareholders Interpretation of the Presstek Letter:
1. FUJI: The letter refers to a new relationship for Direct Imaging on press, off press, and consumable applications. Based on considerable time spent reviewing new Presstek/FUJI patents, one might interpret new developments of a direct imaging press, possibly using the new patent obtained from the Heath purchase. Also, some type of toner based concept or "non-impact printing" could be in the works to share in any competitive advantages from toner based concepts and the use of the new layered Presstek plate. In addition, consumable applications can only mean a plate deal is certainly a part of the package. (Seems everything is based on the PEARLgold plate and the new layered plate) I believe all of this as it relates to FUJI, could be brand new
technology.
Now, reading between the lines, it is quite clear that Presstek is unable to disclose any details regarding this new relationship. Why? The Bears say it could only mean that Presstek is attempting to hide that the "fact" that there contains no substance or merit to Presstek's agreements with FUJI. They would like us to believe that the new relationship "must" contain very little advantage to the company financially...both now or later. Many state it would certainly be in Presstek's favor to provide full disclosure of details and tell the world all of their plans.....or would it? Ask yourself, If you were managing either FUJI or Presstek, and had developed brand new leading edge technology, in order to assure a first-to-market for the technology, would not total secrecy be your top priority? Does not the absence of any acknowledgment regarding the Presstek/FUJI relationship on the FUJI web sites, not confirm the secrecy surrounding the great importance of the companies projects? I would say that the agreements with FUJI are totally confidential. I would bet that as soon as a true leadership position is defined, both companies will release all of the details to the world. (I would expect this to happen at a large trade show) Meanwhile, read the patents and make up your own minds as to the significance that this new relationship has to the profit margins for both of the companies.
As far as plates, with the big move to thermal imaging and CTP, it stands to reason that the PEARLgold plate will be a huge success and is desired by many. That plate was not developed overnight and it appears that maybe FUJI wants a big piece of the action.
2. Tom and my guess for the Presstek purchase of the Heath Custom Press Company appears on target, as Presstek wanted the Heath patents. They call it "an important element of our long term strategy" and "will provide new ways of implementing direct to press imaging technology and consumable printing plates." If you haven't already, READ THE PATENT....it does not take much imagination to put the pieces in the puzzle and understand how significant this patent is to the companies developments.
3. Heidelberg: Presstek's relationship with Heidelberg is excellent and the letter states that talks regarding continuing future production requirements are continuing. Both companies HAVE ALREADY AGREED to the use of Presstek technology for FUTURE HEIDELBERG PROJECTS! Heidelberg has "expressed its intention to maintain its relationship with the company and will continue to be an important customer to Presstek in the future" (Sure shoots holes in the Barrons article from a couple of weeks ago, doesn't it?) As the backlog of QMDI press orders are now caught up, Heidelberg continues to install substantial numbers of the Quickmaster DI's worldwide. They have a very strong advertising program directed for the Quickmaster and are now entering new markets with their most successful press.
4. "PEARLgold is expected to be in serial production by mid year." "Serial Production" is termed as full availability to fill all orders. As it appears this is tied to the Catalinia line and will receive the interest and use from thousands of printers worldwide, I expect this plate to provide huge increases in new revenue to the Presstek company.
5. The Matchprint Laser Proof system is completing a successful Beta Testing and will be soon ready to sell. (Early 1998 = First Quarter?) A duel system (platesetter and proofer) will sell for around $225,000. Pitman states many printers have been placing advance orders with $5,000 deposits so as to be first in line for this new technology. The printers forums indicate this Presstek product is a much better process and much less expensive than the Kodak Approval, which has previously sold many hundreds of units. The Kodak system however, DOES NOT CONTAIN A PLATESETTER that will directly image the proof to the press like the Presstek product will! This is an inexpensive contract proof solution that will make Presstek a big bundle of new revenue in 1998....and it is most certainly a desired item from printers worldwide!
6. Scitex/KBA 74 Karat press: This is a large format press which has been targeted to compete directly with the Heidelberg Speedmaster and also uses Presstek's technology patents and Presstek's plates. There have been many thousands of inquiries from printers to Scitex regarding this press's availability and potential pricing. Presstek will receive a royalty for each press sold. This press appears to have a great future value to the Presstek's bottom line....from royalty and from plates! Scitex says "the 74 Karat press "really burns through the plates" $$$$$$$$$$$$$$$!!!
7. Alcoa Packaging Equipment/Presstek, received first place for innovation in a recent NMDA awards meeting for the imaging on cans. The articles are showing there is direct interest worldwide for this direct-to-press system by many can manufacturers. This will be an additional provider of revenue to Presstek and use many new Presstek plates.
8. Sakurai is marketing the PEARLsetter as the PlateMaster and expects to receive increased orders in 1998. See the following link regarding a printers success with this system: sakurai.co.uk = It was in July 1996 when Aylesbury printer Driftgate installed the UK's first computer-to-plate system from Sakurai Machinery and the company reports that since then the Presstek system has had an enormous impact on its profitability......
9. Omni-Adast: This press sell for $1M and saw 3 new installs in December. Rumor is that Presstek receives 1/3 of the price as a royalty and kit sale. The letter reads that Omni has "reported increased sales activity with this product" and "that they expect to see the early market acceptance of this product continue into the future." BTW, this press uses many plates and is being used for more than one shift in each location.
10. Nilpeter DI web press: This press is now for sale and is being sold in Europe and the US. According to my call to Nilpeter today, they expect to sell "many" (would not give a direct number) of these presses in 1998, as interest is very high for this direct imaging web press which features the patented cassette feature for the plates.
11. Horsell Graphics Industries: Horsell will be providing additional exposure for Presstek by marketing Horsell's new thermal CTP plate, which is called the Horsell Electra DC. This platesetter uses the PEARLsetter Presstek technology. The Horsell Icon line of CTP plates and imaging systems and PEARLgold plates have been tested and provide exceptional imaging results. Horsell in England stated on the phone today they anticipate platesetter sales to be approx. 25 to 35 units in 1998, beginning in England and then in other European countries.
12. Fuji Graphics Systems has a large distribution system in Canada and will be the marketing arm of Presstek over there, similar to how Pitman operates in the US. They have already sold Presstek platesetters in 1998 and expect additional sales of Presstek plates and platesetters to printers to be "brisk" for the remainder of the year.
13. As stated, I believe the class action suit will be decided independent of the SEC agreement with Presstek and will provide very minimum exposure to the company. We can be quite certain that the company agreement was carefully negotiated with the shareholder suit in mind. Interesting that the court has not yet ruled whether to dismiss or not. "The company has committed to opposing each and every allegation in the suit"
14. The Delta plate production line (formerly Catalina) is up and running and nearing completion with favorable initial test runs. The letter states that they will be "producing prototype materials by the end of this quarter and that the system will be on-line by mid-year." This vacuum production process is expected to manufacture Presstek's plates at substantial savings over present cost and at great increase in revenue to the company in 1998. This will enable Presstek to meet the expected demand for their vast plate offerings.
15. Presstek continues to add to their long growing patent list with 20 new patents that are yet to be approved. They now hold 59 approved patents, and as of today....62, including the patents acquired from Heath Custom Press. These patents are extremely valuable and hold the key to on press imaging and many key printing plates. This technology, when used by other manufactures will result in additional royalties to Presstek for many years into the future. (It was interesting to note that the Heath patent acquisition was mentioned twice in the letter to shareholders and such importance was given to it.) (We need to read between the lines!)
16. No one should discount the following statements as it is clear that Presstek technology is desired by others. "The company is also engaged in on-going discussions with other suppliers to the printing and publishing business who wish to use Presstek technology to their advantage...."
"The company continues to seek potential partners that will become involved in the use of Presstek's direct imaging and related thermal plate technology in an ongoing manner."
In all, I believe the Presstek Management provided as detailed of an overall view of their business relationships as possible without disclosing details. They primarily have provided shareholders with a great feeling of expectation for the near future for increasing profits from their new and existing ventures. All of this, combined with my own research, confirms my belief that this company is only just beginning to explode upon this industry, as their new technology gains acceptance and becomes the actual standard for others to follow.
Neil |
