Janus Capital Group Inc. reported their earnings today and announced plans to sell its printing business, Rapid Solutions Group (RSG). RSG reported a third quarter net loss of $38.6 million, which includes a $36.0 million impairment charge, net of tax. In light of Janus’ decision to sell its printing and fulfillment operations, the company evaluated RSG’s s assets, resulting in a write-down of a portion of goodwill, certain intangibles and fixed assets.
Originally RSG was the marketing division of DST Output Technologies. It was sold to Capital Group Partners in December 2003, a wholly owned subsidiary of Janus. The printing business has struggled to become profitable.
Last year Janus reported RSG loses between $3 and $5 million on about $20 million in revenue each quarter.
Background information compiled in October 2006 by PrintCEO blog on Rapid Solutions Group.
Janus Capital Group, an investment and mutual fund company with $158 billion in assets, owns a printing company called Rapid Solutions Group (RSG). Originally RSG was the marketing division of DST Output Technologies. It was sold to Capital Group Partners in December 2003, a wholly owned subsidiary of Janus. According to financial data issued by Janus, RSG loses between $3 and $5 million on about $20 million in revenue each quarter. In 2004, after Janus acquired RSG, the company purchased 6 iGen3's. The presses were installed in RSG's three digital production facilities in New York, Chicago and California. At the time, it was one of the largest installations of the iGen3 in the world. According to the Wall Street Journal, the iGen3's replaced HP Indigo machines.Mr. Hil (Garet Hil, former CEO of Rapid Solutions Group) says he decided not to continue with the Indigo presses because he could produce an image 15% to 20% cheaper using the Xerox product and because the Xerox sales force had been more accessible than H-P's.In October 2004, Printing News magazine wrote a story about the company and their new digital presses. Here's a quote from a senior executive:
"We think that many industries are ready to make that move," said Cynthia Bajana, vice president of consumer relations. "There's a lot of buzz around personalization and customization, and how personalization and customization will increase assets in the case of the financial services industry, as well as increase membership in the case of the healthcare industry."Janus valued RSG at $115 million when it acquired the company in December 2003. Since Janus acquired RSG, the company has an operating loss of over $50 million. ($10.8 million in 2004, $29 million in 2005, $13 million through the 3rd quarter of 2006.) Janus views RSG as having little to no impact on their overall balance sheet. Janus is a major "customer" of RSG, but the company actively seeks printing just as any other printing company and operates separately. (See web site) In the past year, the company has named a new CEO/President, CFO and a new VP of Sales.
Discussion
By Hal Leader on Oct 26, 2007
Bill: Thought this would be of interest. Xerox vs Indigo. Not sure if they made a good choice. Hal
By Bill on Oct 26, 2007
They should have purchased a Xeikon. The most productive and economical digital color press in the market.
By Sally Seaver Shabaka on Oct 27, 2007
One of my clients priced a variable-data 24-page catalog, 4-color process, custom-built per customer. With Indigo technology the quote was around $6 per catalog, with iGen it was about $1.25 ea. I think that the college-based print shop that did the covers for Reason [http://www.reason.com/issues/show/391.html and NPR article on Database Nation, http://www.npr.org/templates/story/story.php?storyId=1870509] used a Xeikon for that project, but I'm not familiar with the pricing.
One of the big issues with getting print businesses with variable-data publishing services to be profitable involves the software used to deliver the digital file to the press. The Xerox folks recommend XMPie, but the marketing firm that produced the Reason project have been unhappy with it. The HP folks are doing development with a solution tied to QuarkXPress, but QuarkXPress is better as a manual tool. It has a technical approach that is NOT suitable for automation.
So I can't help wondering if the problem with the profitability of Rapid Solutions Group is related more to the software that drives the variable data publishing versus which printing press it chose.
By Ex-Employee on Oct 27, 2007
I worked for this company for a few years at their Melville NY headquarters. Their management staff is lost and clueless. Their Facilities / machine repair department is in a constant race against themselves trying to keep up with their constantly problematic Perfectbind machines, and Their production and fulfillment employees are constantly overworked sometimes only seeing 1 day off a month. I am really not suprised with this.
By RSG employee on Oct 31, 2007
I was employed at RSG during the time of the conversion from HP to the IGens. In 2003 when the decision was made to purchase the 6 IGens, the company was already experiencing significant revenue erosion and the cost of the new equipment further exacerbated the poor financial outlook. There were at least 4 large-scale layoffs from 2000-2004 in attempts to offset the losses. It is not surprising that the company could never recover from the foolhardy decisions made by former egocentric CEO Garet Hil.
By Henk Gianotten on Oct 31, 2007
This is what I read on the RSG web site today: About Us: At Rapid Solutions Group, we help our clients achieve meaningful results through the creation and distribution of relevant customer communications. Using digital print-on-demand and VDP technologies, as well as Internet-based solutions for ordering, creating and monitoring all areas of fulfillment, Rapid Solutions Group ensures our clients’ B2B and B2C communications are attractive and meaningful to each and every specific recipient. Rapid Solutions Group Stats and Facts: * Professionals — With more than 460 associates coast-to-coast, we have the experience and expertise necessary to design, develop and produce your mission-critical customer communications. * Cutting-edge Technology — We have made the necessary investments in infrastructure and architecture to keep our clients ahead in the communications game ($20,000,000 in the past two years alone). * Capacity — Our more than 300,000 square feet of useable production space helps us produce approximately a billion-plus images each year. * Financial Strength — More than $90,000,000 in revenue each year … no significant debt. * Business Continuity — Four locations across the country with mirrored redundancy to support disaster recovery and load balancing. * Experience — Over 20 years of offering fulfillment services and innovating messaging processes and techniques in the communications industry. --- No debts and 90 million in revenue? Adam, do you use other figures than their marketing guys?
By Adam Dewitz on Oct 31, 2007
The information was sourced from Janus' 2007 Third Quarter Results. Available here: http://ir.janus.com/news/20071025-271086.pdf
By A Nickle Thought on Nov 02, 2007
Today’s print businesses are going to continue to struggle going into 2008. Consolidation and attrition will further raise the profitability of the fittest.
It is fool hearted to think that the sole success of a printer is the acquisition of technology like Xerox/HP/Kodak/Xeikon and supporting software. If we were to rank the top five reasons for the further decline of printing companies in the US you will find one of them to be 'business sense and the ability to create a sound plan with opportunities like digital, fulfillment, data services etc that will drive the continued success of a printer in today’s competitive market.
By Mike Moran on Nov 07, 2007
I don't think that their losses can be attributed to the Xerox vs Indigo decision. My sense after reading what some ex employees have posted is their operational problems are wide spread. Looking at the number of employees vs the revenue they generate tells me they must be chasing low margin opportunities. listen to what Jeff Hazlet the CMO for Kodak has to say about the way a printer should sell.
By Gail Joye on Nov 21, 2007
I will offer an internal perspective as a former manager. The struggle within RSG to manage effectively and to find itself led to despair throughout the organization. Most often, management attempted to "re-invent" yet did not stick with their plan. Many talented people (many with years of print background experience) have left because of lack of leadership. And as an added note, a poor work environment. There is a thoughtless notion that technology will overcome the support of talent.
Indigo vs. Xerox. I can tell you there wasn't a week that went by that the "powerhouse" Xerox presses were not down. That not only costs time but revenue. Don't know where the fictional numbers come from; they are far from realistic.