By Cary Sherburne June 23, 2003 -- Scitex Corporation Ltd. announced last week that Nachum "Homi" Shamir has been appointed to the position of President and CEO of Scitex Corporation. Mr. Shamir will replace Yeoshua Agassi, and his appointment will take effect on June 30, 2003. Mr. Shamir is currently President and CEO of Scitex Digital Printing, Inc. (SDP), and will continue to serve in that capacity. According to Scitex, this appointment will bring a global view of the graphic arts and data center markets to the Scitex parent organization, as well as hands-on experience and direct knowledge of customer applications and businesses Mr. Shamir has a rich and varied 10-year history with Scitex Digital Printing, having served as Managing Director of the Asia-Pacific and Japan region. Subsequently, Mr. Shamir was appointed President and CEO of Scitex Digital Printing, where he led the company in becoming an innovator and provider of ultra-high-speed, variable information with full- color digital printing. Mr. Shamir is actively involved in industry associations, the community, and academic boards. He has a special interest in educational excellence in science and technology. Mr. Shamir is a worldwide featured speaker, and received the On Demand Pioneer Award in April 2003. WhatTheyThink spoke with Mr. Shamir shortly after he was appointed to his new position. WTT: Scitex has an interesting approach to the market, through the building of a network of companies focused on combining digital imaging technologies with the Internet to deliver innovative business communications solutions. Other than Scitex Digital Printing (100% owned) and Scitex Vision (75%), you have a minority stake in the other companies. Can you talk a little about this business model and where you see it going in the future? HS: Let me go back a few years. As you will recall, a very large part of Scitex was merged into Creo. Prior to that, Scitex was an operating company that did business in digital printing, imaging and related market areas. After Creo acquired part of the business, Scitex was converted back into a holding company with two primary holdings and interests in other companies and technologies, many focused around inkjet printing. More and more, though, we are seeing synergy between some of the technologies and markets that comprise the holding company. One of the things I will be doing is to explore the synergies between various assets Scitex holds, particularly around inkjet. We have products, patents and technologies in both continuous inkjet and drop on demand. There truly is a synergy in the technologies and in the market. My thought is that perhaps we should go back to being an operating company and better align our relationships among the individual companies. Ultimately, we will determine what makes the most sense with respect to the value of the assets of the company. Basically, I will be assessing each of the operating units that are now operating independently within the Scitex family, from a technology, marketing and manufacturing perspective, looking for synergies that can benefit the company as a whole. We have a powerful portfolio of inkjet technology, and I want to leverage that. WTT: Back in the good old days of a booming economy, there was speculation that Scitex Digital Printing would eventually spin off from Scitex and become an independent, and possible publicly traded, company. Based on your comments, I assume that possibility is off the table? HS: Not necessarily. Again, we need to assess what will be the best value to the shareholders for all of the assets and make decisions accordingly. Being a holding company, and with our stock price having fallen so low in the past year or two, we need to work hard to bring the shares back up, whether through leveraging our synergies, spinning units off, or whatever; my job is to assess all of this and determine what is best. WTT: The approximately three million Creo shares that you still hold are classified as "held for sale," and it seems to be common knowledge that Scitex would like to divest itself of that holding. How long do you anticipate before those shares are completely sold? HS: We currently own just over six percent of the company. That's an asset we have available if we need cash, but we are in no rush to sell it. If we believe Creo can do well, we will hold it for awhile. That's also part of an assessment process. We recently sold approximately a three percent investment in Creo. And I view this as a financial investment, not a strategic investment. WTT: The Board make-up has changed at Scitex. Tell us why this happened. HS: A major shareholder of Scitex is a holding company called IDB, who recently acquired shares of Scitex that had belonged to another holding company. Since there were changes in the shareholders, there were new appointments to the board from the new holding company. WTT: Will you personally be based in the U.S., and do you plan to seek a new President for Scitex Digital Printing? HS: I will be based in the U.S., and I plan to continue to run Scitex Digital Printing. Our operations will continue to be based in Dayton. Many of our shareholders are in America or around the world and not in Israel. It just makes it easier for customers, shareholders and potential investors to visit me, and see the company and our operations. We have a wonderful facility in Dayton, with lots of things to show visitors, including R&D and manufacturing, all in our state-of-the-art facility. It's a great place to bring customer, partners, and investors. So at this stage, I will continue running Scitex Digital Printing and will not be soliciting a new president. In any case, Scitex Digital Printing represents 65% of the revenues of Scitex, and more than 100% of earnings, since not all of our investments are yet running in the black. It's a major asset. And we have a great team here, as well as in Israel. Dov Ofer is running Scitex Vision; he's a very good manager. It makes sense to let him run that business and I will run this one. WTT: Since you have spent the last two years running Scitex Digital Printing, can you share with us how that business is going, and where you have seen your biggest successes? HS: Our VersaMark Business Color Press (BCP) has done well. We just won a huge deal in Europe with the French Social Security agency worth US$30 million. So I would say that we have been very successful with the product line. The business has been growing … which is one of the reasons I was selected to be the CEO of the parent company. WTT: CAP Ventures shows the data center print market flat to declining depending upon product category, a situation that is exacerbated by the slow economy and the decline in capital investments. How is Scitex coping with the economy, and specifically, how have your sales been for output devices in the first half of 2003? HS: If you look closely at the numbers, digital color is the fastest growing segment of the printing industry. Our printing systems offer full-color printing, and we are benefiting from the increasing move to color in business printing applications. We have not finished the first half of the year, so I can't really comment on those results, but the first three months were very good to us. Generally, I am optimistic overall in terms of the full year. Our product line has been received very well. I see more impact in the U.S. economy, but our business is 60-65% international, actually split pretty evenly between the U.S., Europe, Asia-Pacific and Japan. The Asian and European regions are doing very well for us, and they compensate a little bit for the slow U.S. economy. But we are starting to see some good success in the U.S. as well. I've been out visiting customers, and I feel good about it. WTT: How is your installed base split between publishing, and data center or direct mail operations? HS: Our installed base is primarily transactional, direct mail, or the convergence of the two. All of them require variable data applications; similar to the French Social Security operation I mentioned earlier. We also have installations in Korea, Taiwan, China, and have just concluded a deal in Greece. I have to say, it's going very well. WTT: CAP Ventures and others have predicted major future growth in both placements and quality for high-end inkjet products. Do you have any comments on that? What are you seeing in terms of volume trends in your current installed base? HS: What I see is that people want to move to color, mainly because they see the potential of leveraging their CRM investments, as well as the elimination of preprinted stock and reduction of overall inventories. When you think about it, there is tremendous value. You can get rid of inventory, and at the same time, you can incorporate color into CRM applications. It all comes together. Obviously, the market is not so developed yet or we would have machines everywhere! But I am very proud that most of our customers very quickly become repeat customers as their volumes grow. As the market develops, we are seeing a need for midrange equipment for lower volume needs, and for flexible payment terms. That's why we introduced Vantage, our midrange offering, as well as different pricing options including click-based models. In addition, we are trying to take the price point down even lower as we move our products and technology into much larger, but more price sensitive, markets. WTT: Have you implemented the EFI Fiery server for the VersaMark yet? HS: Not yet. We are working closely with EFI and are expecting to introduce it before the end of the year. Our goal is to show it at Xplor. We also plan to be able to announce a quality enhancement as well at Xplor. BCP quality is acceptable for a lot of applications, but for some applications, our customers would like sharper images and better color fidelity. So we have under development an even higher resolution print head with a very small drop size with multiple-drop capability. This allows us to achieve a greater resolution, so that we are running at 1200x300. WTT: What other new and exciting things have been going on at Scitex? HS: Well, needless to say, I need to understand what is happening in the other companies in more detail, but there is a lot of excitement. Once I have been able to dig into it more, I would be happy to speak with you again. As an example, though, Scitex Vision is getting ready to introduce a couple of new products; they are doing very well in the graphic arts market. And we have recently merged Aprion technology into Scitex Vision products. So you should see a lot of interesting and leading-edge products coming soon! WTT: Do you anticipate making any significant strategic shifts within in the near term? HS: My plan is to concentrate our efforts around inkjet technology. That's what we know, and that's the marketplace where we will play. We have a veritable powerhouse of inkjet technology in our portfolio, including some mature technologies and others like Jemtex and Aprion that are fairly new and very, very innovative. We will be combining that intellectual property with the knowledge we have in Dayton, and we believe the results will be very exciting to our customers. WTT: Any closing words you would like to share with our readers? HS: I'm certain that people will be very excited about the new direction we are taking and the product lines that we are going to bring into the marketplace. You know, in the "old days," Scitex virtually owned the prepress market. Our goal today is to attain that type of leadership position in the industrial inkjet market. If you really look at the inkjet market, there are two powerhouses: HP owns the office and the home; and SDP owns the industrial and graphic arts markets. As far as the industrial market, there is no other company that has as much intellectual property, knowledge and installed base as Scitex. There are some in the ID Systems market, but not in the graphic arts and transaction printing markets. Scitex Digital Printing has registered over 500 patents, most still in force. Our other companies have a lot of patents as well. We are positioning Scitex as the industrial inkjet powerhouse, and we will be taking that market into the future with innovative solutions, just as we did in prepress. WTT: Mr. Shamir, it has been a pleasure speaking with you. Thanks for taking the time to talk with us and best of luck in your new role. Sounds like you will be busy!