Xerox Corp. today reported a 52-percent drop in its third-quarter profit, but at the same time its numbers slightly bettered the expectations of financial analysts on Wall Street. Xerox CEO Ursula Burns said, “Our third-quarter performance reflects our continued disciplined approach to managing cash and reducing costs. As a result, we exceeded our expectations for earnings and operating cash flow.”

The company generated US$123 million in third-quarter profit, ending September 30, which was down from US$258-million in the same quarter a year ago. Total revenue for Xerox’s Q3 fell 16 percent to US$3.68-billion, compared to US$4.37 billion a year ago. Naturally, the company pointed to poor economic conditions for its drop in profits.

“Just as we are closely managing costs, our customers are doing the same and we have not seen a meaningful shift towards increased spending on technology,” said Burns. “For many of our business clients – small to large – there remains a hesitancy to invest until more economic factors show signs of steady improvement.”

Burns pointed to positive Xerox numbers in its growing services business, which was recently propped up by the move to acquire Affiliated Computer Services: “We’re winning new business from clients who want to reduce their cost base through our industry-leading managed-print services.”

Apple Inc. yesterday once again claimed to have its “most profitable quarter ever” as the Cupertino-based company announced financial results for its fiscal 2009 fourth quarter, ended September 26, 2009, including revenue of US$9.87 billion and a net quarterly profit of US$1.67 billion. This financial news helped to increase the value of Apple shares by seven percent, on the same day.

While this quarterly increase represents a 47 percent profit jump, Apple, for its entire 2009-financial year, saw profit rise by 18 percent to US$5.7-billion, while revenue climbed 13 percent to US$36.5-billion. International sales accounted for 46 percent of the quarter’s revenue.

Apple sold 3.05-million Macintosh computers during the quarter, representing a 17 percent unit increase over the year-ago quarter. The company sold 10.2-million iPods during the quarter, representing an eight percent unit decline from the year-ago quarter.

Apple sold 7.4-million iPhones in the quarter, representing seven percent unit growth over the year-ago quarter. According to its GAAP accounting structure, Apple recognizes revenue and cost-of-goods sold for iPhone and Apple TV over their estimated economic lives.

“We are thrilled to have sold more Macs and iPhones than in any previous quarter,” said Steve Jobs, Apple’s CEO. “We’ve got a very strong lineup for the holiday season and some really great new products in the pipeline for 2010.”

Bruce Kenworthy of Rhino Printing recently spoke to members of the Alberta Graphics Arts Industry Network about the WorldSkills Calgary printing competition. Marvin Calderon, a journalism student at SAIT, reports on the meeting and why Kenworthy feels WorldSkills had such a positive impact on the industry. The October issue of PrintAction magazine includes a feature story written by Simon Beauchamp about his experiences at WorldSkills.


By Marvin Calderon
The past year of economic doom and gloom has many in printing worried about the security of their careers, but some are optimistic about the new wave of challenges and opportunities facing the industry. With a rising generation of professionals who are adaptable, resourceful and skillful, the sector is making a strong move forward in imprinting a positive outlook for the future of printing.

On Thursday September 24, 2009, members of the Alberta Graphics Arts Industry Network (aGAIN) heard from Bruce Kenworthy of Rhino Printing Solutions how the future of the print industry in Canada was in good hands.  

“Printing is going to be around for a long time,” said Kenworthy. “It’s sustainable, it’s renewable and we’re damn lucky to do what we do.”

Kenworthy was a guest speaker inside the historic Lougheed House in Calgary, Alberta, and was invited by aGAIN to share his take on the recent WorldSkills Calgary 2009 event in which he was a workshop supervisor for the offset printing competition, a volunteer position he was offered last minute. He told the audience of 26 people – compromised of industry leaders, educators and students – how WorldSkills had a positive impact on the industry.

The event, held over the first week of September, showcased the talent of hundreds of international competitors in their respective trades to approximately 151,000 visitors and revealed the versatility of the competitors.

He explained competitors in the printing competition were scored on five tasks: Printing with Sheetfed Offset Training Simulators (SHOTS) from Sinapse Print Simulators; print job (CMYK and one mixed colour) on Heidelberg SM-52 press; cutting of products; digital printing; and density measurements.

“This was the first time in the short history of offset printing in WorldSkills that we used print simulators,” he said – the event has only been in the competition for three years.

He recounted how some competitors found it difficult to work the simulators because they had no previous experience using them. Canadian bronze-medalist Simon Beauchamp had some experience on such systems, he said, and skillfully adapted to the unforeseen situation. As a result, he received a perfect score in the task.

Development and training
Willem Sijpheer, academic chair for the Journalism and Digital Graphics Communication (DGC) programs at the Southern Alberta Institute of Technology (SAIT) Polytechnic, reinforces that it is absolutely vital for new workers in the printing industry to have access to the training needed to manage evolving products and services.

For this reason, according to Sijpheer, SAIT acquired a new Heidelberg press to use in instructing its future students. He explains that Heidelberg has been very supportive in helping the DGC program acquire up-to-date technologies because they understand that future SAIT grads might become major decision makers in the future.  

“The new press will give SAIT that recognition for many years to come in the printing and graphic arts industry,” says Sijpheer, “and will ensure SAIT graduates are well prepared for many employment opportunities.”   

According to Kevin Henderson, a WorldSkills ambassador, many former industry workers who attended the event were surprised by the advancement of technology in the industry. These were people who came out of school over 20 years ago, he said, and sought out jobs in the oil industry because that was were the money was. 

“But they still had an anchor to the print industry to come back and see what technology is doing to the industry, and anyone I talked with had their eyes opened that it’s certainly changed.”

Emerging youth in printing
aGAIN members also heard from Kenworthy about the other competitors’ training in their home countries, and the remarkable skill level of these young industry workers. One competitor stood out from the rest with his incredibly trained eyes, said Kenworthy.

When it came to mixing the ink in their second task, the competitor from Japan “just looked at the colour in his Pantone book and never used anything else after that,” he said.  

“He mixed everything by eye.” 

He said his colour was one of the closest matches of all the colour tests. 

Kenworthy said, above everything, he’s learned that “after seeing the quality of the competitors from around the world, there’s good printers all throughout this world and the industry is in good hands. 

“Not only here in Canada, from what I saw from what we were doing, but [also] around the world.”

Heidelberg Chairman Bernhard Schreier responded to the collapse of merger talks between his company and manroland in an interview with Frankfurter Allgemeine Zeitung (Frankfrut General Newspaper) today.

When asked why the merger talks failed between the two companies, Scrheier did not answer the question directly, instead saying, " Let me put it this way, I was extremely surprised at the way the whole thing was reported in the media. In our ad hoc announcement on Friday, we confirmed that sales appear to be bottoming out at a quarterly level of around EUR 500 million, but we predict that it will take a little longer before there can be any talk of a recovery."

When asked again regarding the merger talks, Schreier was reluctant to acknowledge talks were even underway. "We have not been commenting on speculation and that will remain our policy," said Schreier.

He also expressed surprise at the reaction from the company's financial forecast last Friday. "We recorded a positive free cash flow in the second quarter, which means that our position for the year as a whole will be better than the previous year. If anyone feels this can be interpreted as an indication of new risks, I have no comment to make."

Schreier mentioned that Heidelberg were in talks with Koenig and Bauer, but only regarding possible manufacturing agreements.

When asked whether or not the company will be stepping up efforts to seek a new investor, Schreier said, "We never relaxed our efforts so there is no need to step up our activities in this area." He also said he was confident the crisis has bottomed out at sales of EUR500 million per quarter and annual sales will return to EUR 3 billion.

Despite having made no official statement that merger talks were in progress, Reuters has revealed that manroland has called off the much-rumoured merger talks with Heidelberg, due to "poor financial results" of its larger rival.

The report cites it has consulted with three sources familiar with the matter. It also revealed that a merger in the future was not out of the question, but it would lie beyond 2010.

Heidelberg made a financial announcement on Friday saying it expects its net results for 2009 to be far below that of the previous year. The company will release its final numbers on November 10. Heidelberg's stock took a steep dive at the report on Monday, losing over 20 percent of its value.

According to Reuters, "Heidelberg's profit warning came just days before manroland and Heidelberg were to formally agree to proceed with merger talks."


Read the Reuters report here.

Heidelberg has finalized its previously announced job cuts of 1,300 this week to its sites at Wiesloch/Walldorf, Amstetten, Brandenburg, Ludwigsburg, and Mönchengladbach. A further 200 employees have agreed to leave the company on a mutually acceptable basis, making a total of 1,500 job cuts at the German sites in financial year 2009/2010.

"Following constructive discussions, we have found a reasonable solution for everyone involved," stated Heidelberg CEO Bernhard Schreier. "These painful cuts are essential to counter the effects of the most serious crisis of our industry and create a stable position for the company's future," he added.

Heidelberg previously announced its intention to reduce its workforce by 5,000 by 2011. Following the discussions with its employees, the number has been revised to 4,000. The additional savings will be made by dispensing with collectively agreed payments and payments above the general pay scale, and by agreeing to flexible working time models to adapt personnel capacities to the order situation. The Management Board and executives are also foregoing remuneration to a comparable extent in order to help lower personnel costs. The agreed upon package of measures will result in these costs being cut by more than EUR 250 million during the current financial year, compared to the previous year.

By the end of the cuts in 2011, the company expects to save EUR 400 million. As of June 30, 2009, the Heidelberg Group employed 18,353 staff worldwide.

Thad McIlroyPublishing pundit Thad McIlroy has produced a major report on Adobe’s planned US$1.8 billion purchase of Web-analytics firm Omniture, announced on September 15. This marks the first report to be produced by Thefutureofpublishing.com, which McIlroy founded to monitor and analyze the strategic directions of digital publishing.

The report, which is to be made available on October 12, 2009, is designed to capture “the big picture of this deal and its even larger implications", which includes a detailed look at the adoption of Web-based analytics, as well as the strategies of tightly integrating marketing-and-design functions together – “and the potentially troubling increased threat to privacy on the Web.” The report also includes interviews with customers as well as Adobe and Omniture executives.

"I feel confident that The Future of Publishing team has got a fix on the upside of the deal. At the same time we've analyzed the possible negative implications and these are fully discussed in the report,” said McIlroy. "After weeks of debate and speculation, this report will fill in the blanks. How likely is it that the deal will deliver on the benefits promised by the two firms? What are the financial implications for each? What does it presage for the future of digital media?”

The report can be purchased this week, as a PDF download, for $75, while it will be $95 on October 12.

View report details or purchase.

The board of Winnipeg-based media conglomerate, Canwest Global Communications Corp., placed its prime business units, including the National Post newspaper and Global Television, into the Companies’ Creditors Arrangement Act.

Announced today, the move quickly followed another announcement of Canwest entering into a recapitalization agreement with a key group of creditors, what the company calls an “Ad Hoc Committee,” representing eight percent of senior subordinated note-holders of Canwest Media Inc. “Because it has the support of the Ad Hoc Committee, we believe that we can use the stability offered by the CCAA to implement this plan in four to six months,” said Leonard Asper, Canwest President and CEO, adding, “all our operations will continue uninterrupted.”

The CCAA bankruptcy protection specifically involves Canwest, CMI, Canwest Television Limited Partnership (including Global Television, MovieTime, DejaView and Fox Sports World) and The National Post Company. It does not include Alliance Atlantis, which the company purchased in association with Goldman Sachs in 2007 or Canwest Limited Partnership – the company’s Canadian publishing and associated online and mobile operations.

Canwest purchased 50-percent ownership in the National Post newspaper back in July 2000, as part of what was then the biggest media deal in Canadian history, involving the $3.2-billion acquisition of Hollinger International Inc.’s Canadian newspaper and Internet assets – controlled, at the time, by Conrad Black. The deal also involved 13 daily metropolitan newspapers, 126 community newspapers, and various Websites such as Canada.com.

Then in August 2001, Canwest purchased the remaining 50 percent stake in the National Post from Hollinger – for $1. In April 2009, Canwest wrote down the value of its newspaper assets by $1.2-billion. At the start of this October, National Post CEO Paul Godfrey was reported to be leading a management buyout of the daily newspapers owned by Canwest.

View Canwest timeline: From 1974 to 2009 by The Globe and Mail.

Traditionally focused on the North American printing market, Presstek Inc. today signaled a new direction by signing up a Hong Kong distributor for its printing presses and placing a Business Manager into the European market.

While it is headquartered in Hong Kong, Duplica Printing Equipment will also distribute Presstek presses throughout China. "The printing industry in Hong Kong and China is seeking an efficient, high quality solution for short-run color, and Presstek's family of DI digital offset presses is the perfect answer," said Charles Lam, Managing Director of Duplica.

Presstek Inc. also strengthened its position in Europe by appointing Axel Thien as its Business Manager for Germany, Austria, and Switzerland. Thien is responsible for expanding Presstek's presence within the region, as well as developing a European dealer channel for the company. Thien has over 11 years of experience on the technological side of printing, working in a variety of roles at Heidelberger Druckmaschinen AG, including the last four years as a Product Manager for CTP and six years as Product Manager Consumables for Heidelberg USA. Earlier in his career, Thien spent five years with Agfa in a variety of management roles.

Agfa Graphics announced today that LR Graphic Supply, a Canadian dealer with over 30 years of experience in the graphics communications industry and newspaper publishing market, will begin distribution of Agfa's prepress solutions.

"We are very excited about working with Agfa," said Guy Potvin, Executive Vice President at LR Graphic Supply. "It is no secret that Agfa has a portfolio of cutting-edge products that have been well received in the industry and increasingly in Canada. On the other hand, at LR Graphic Supply, we have built a reputation for unparalleled service and support to our customers. We have a special knack for building bridges and forging new opportunities. We view this new partnership with Agfa as a natural complement to our current business and will benefit our current and future customers."   

"LR Graphic Supply's consultative sales approach with newspaper accounts as well as small- to mid-size companies is exemplary. Their reputation for tapping new opportunities is impressive. We believe this new partnership will be mutually beneficial going forward," said Ruben Silva, managing director, Agfa Inc.

LR Graphic Supply has offices in Mississauga, Ontario, and Saint-Jean-sur-Richelieu, Quebec.

Heidelberg CEOThe Frankfurt branch of Reuters reports that Heidelberger Druckmaschinen AG and manroland AG “are set to decide by mid-October whether to proceed with formal merger talks,” according to unnamed sources “familiar with the matter.”

While the Reuters report does not claim a merger is eminent, it does indicate that Heidelberg and manroland executives, and their banking representatives, are involved in serious discussions about melding the two German press makers.

As of yet, no executive from either Heidelberg or manroland has gone on record about the possibility of the merger. At Heidelberg’s PRINT 09 press conference, in Chicago on September 11, CEO Bernard Schreier said, “I do not comment on rumours,” which was a sentiment shared by Vince Lapinski, CEO of manroland North America.

Reuters’ sources suggest Allianz Capital Partners, the investment arm of insurer Allianz, is the driving force behind the merger talks. Allianz has a 65-percent interest in manroland and a 12-percent interest in Heidelberg. One source said, “The government does not at all want state aid [for Heidelberg] to be seen as aid for Allianz.”

The possibility of a merger between Heidelberg and manroland first appeared in mid-2009, when most printing-industry Websites cited various sources within Germany – most focusing on reports from German-based Beyondprint.de and the financial newsletter The Platow Brief. In late August, Beyondprint.de reported that negotiations were underway between Heidelberg’s Merrill Lynch representation and manroland’s Deutsche Bank – with Boston Consulting examining operational issues.

The new Heidelberg-manroland merger reporting, from Reuter’s Philipp Halstrick and Alexander Huebner, quotes one source as suggesting, "There are still a few issues to clear up."

Relative to Canada’s Federal government, Germany traditionally takes more interest in massive domestic business transactions. In addition to the thousands of employees and millions of dollars that both Heidelberg and manroland infuse into the German economy, any such merger would also need to address the €1.4 billion loan Heidelberg received – through various Federal- and State-level initiatives – in August 2009. The governmental loans fall due in mid-2012.

Details of Heidelberg’s €1.4 billion loan

• €300 million loan from the Special Program of the KfW (Reconstruction Loan Corporation) for large companies (with a 50 percent indemnity from the KfW to the banks);

• A €550 million loan supported by 90 percent guarantee pledges from the Federal Government and the States of Baden-Württemberg and Brandenburg; and

• A syndicated credit line from a consortium of banks, also for €550 million.

Xerox Corp. signed an agreement to acquire Affiliated Computer Services (ACS) in a cash and stock transaction valued at $63.11 per share or US$6.4 billion, as of the closing price of Xerox stock on September 25.

Headquartered in Dallas, ACS is described as the world's largest business process outsourcing (BPO) firm. It employs more than 74,000 people, working with multinational corporations and government agencies in over 100 countries from 500 locations. The transaction, which has been approved by the Xerox and ACS boards, is expected to close in the first quarter of 2010.

"By combining Xerox's strengths in document technology with ACS's expertise in managing and automating work processes, we're creating a new class of solution provider," said Ursula Burns, Xerox CEO, who described the deal as a “game-changer” for the company. "Xerox becomes a US$22 billion global company, of which US$17 billion is recurring revenue – a significant boost to our profitable annuity stream. The revenue we generate from services will triple from US$3.5 billion in 2008 to an estimated US$10 billion next year." 

In addition to the exchange of shares, Xerox will assume ACS's debt of US$2 billion and issue US$300 million of convertible preferred stock to ACS's Class B shareholders. On an adjusted earnings basis, Xerox expects the transaction to be accretive in the first year.

THP Greeting CardsFood-assistance programs across Canada will receive 100 percent of the net proceeds from The Printing House’s Seasonal Greeting Card campaign, which last year raised more than $70,000.

For more than 15 years, The Printing House (TPH) has produced seasonal greeting cards in support of various registered Canadian charities. Because the entire production of the greeting cards is donated, including artwork, stock and printing, TPH is able to give 100 percent of the selling price to the chosen charities.  The cards, starting at $1.35 each, can be imprinted with standard greetings, blank or customized with a personal message.

This year, the Toronto-based company has chosen to fight hunger and will donate the proceeds to food programs – run by organizations like the Amethyst Women's Addiction Centre, Dr. Peter AIDS Foundation, HomeBridge Youth Society and the Daily Bread Food Bank – in Canadian cities that hold TPH operations. The company, which donated $70,742.12 to the selected 2008 charities, has 70 locations across Canada.

Order Greeting Cards

The United Steelworkers (USW) joined with NewPage Corp., Appleton Coated LLC and Sappi Fine Paper North America in filing trade petitions, for antidumping and anti-subsidy duties, against Chinese and Indonesian imports of certain types of coated paper.

USW, which represents about 6,000 production workers at paper mills operated by the previously mentioned three companies (in nine American states), claims the unfair trade practices carried out by paper producers in China and Indonesia  “have eliminated thousands of domestic jobs." Over 130,000 workers are represented by the USW in the paper and forestry products industry. The union claims to have measured a loss of more than 60,000 jobs across this sector since 2002.

The new petitions focus on job cuts over the past five years. According a USW statement, “The petitions estimate an increase of 40 percent from total imports of coated paper have flooded into the U.S. market – jumping from 131,687 tonnes in the first six months of 2008 to 185,422 tonnes in the first six months of 2009.  Imports from the two countries [China and Indonesia] together account for nearly 30 percent of the domestic market.”

The petitions were filed with the U.S. Department of Commerce and the U.S. International Trade Commission in Washington, DC.

Eastman Kodak Company hopes to raise upwards of US$700 million in funds, including an estimated US$400-million commitment from Kohlberg Kravis Roberts & Co. L.P. (KKR) based on the planned purchase of Senior Secured Notes that are to fall due in 2017.
 If the transaction is completed, scheduled for around September 30, Kodak's board of directors will appoint two individuals designated by KKR to the board.

In addition, Kodak agreed to issue to KKR warrants to purchase up to 53-million shares of Kodak common stock, which means Kodak could ultimately vary the amount of Senior Secured Notes purchased by KRR. Under the terms of the agreement, KKR is required to hold the warrants and shares for a minimum of two years. 

"KKR has a long, successful record of working with, and investing in, companies with significant value-creation potential,” stated Antonio Perez, Kodak's Chairman and Chief Executive Officer, in a press release about the arrangement. “We look forward to working with the KKR team to accelerate the growth of our portfolio of high-margin annuity businesses."

Kodak also announced it will readjust the release of its upcoming third-quarter results, as it “estimates total segment losses from continuing operations before interest expense, other income (charges), net, and income taxes will be between US$50 million to US$60 million.”

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