: Three Part Series February 19, 2003 Jeffrey J. Burg, Marketing & Digital Services Manager, Visual Systems, Inc. We use PSI/Printcafe and this situation is extremely important to our organization. When Printcafe purchased all of those print management solutions, there was a very strong concern among many companies that Printcafe would lose focus and support and new product development would falter. In listening to other printers and based on our own experiences, I think that was the case to a certain extent. That issue I think is still very important and leads to a question that has to be asked, "Which company has the skills and resources to develop and support standard and custom applications for printers like us?" Creo makes the most sense from a fit and technology application standpoint, though the lines become blurred with communication, information and production. Creo also has the money to invest in Printcafe development if they so choose. But for me that is the rub. Will Creo view this as just another piece to its puzzle - just a way to further entrench itself in our industry - and not give this the time and energy it deserves? With EFI you get someone who has a lot more to lose and therefore may view Printcafe as a "must win scenario." They are mostly a one-product type of organization and they don't have the integrated knowledge and experience that I think is necessary. So which one? On paper it looks like Creo, but from a long-term perspective I think EFI is the answer. If that is the case, then as users we must prepare for a short-term interruption. Name withheld by request With the history of Printcafe and Creo, it would be better for Creo to take the reins at this point and move forward. For another player (EFI) to step in and try and get Printcafe moving, there would be more time and money wasted getting familiar with the business. In the long run maybe the people working at Printcafe should buy each of the management systems back and run them as separate companies again!! - - - Background for this series: Based on site statistics, there is significant interest in the recent Printcafe news. Printcafe’s customers, partners and competitors are interested for obvious reasons. Other executives tell us they keep track because “its just a fascinating business story.” Using a sports example, Printcafe has their share of fans, some rooting against them and those who are just spectators enjoying an entertaining game of business. Recently, over 40 of our members (printers) told us “what they think” about Printcafe and who should acquire the company. Our hypothesis was that most would favor Creo over EFI as the new owner of Printcafe simply because the demographics of our members lean toward medium to large commercial printers. These printers are more likely to have exposure to Creo’s products. However, it also indicates why EFI wants to access this audience. Buying Printcafe would certainly help EFI expose other products to a select customer base. We would like to thank all who helped with this series. You should know that we received numerous comments that do not appear in this report for various reasons. Primarily, we tried to include only the most topical comments (Who should buy Printcafe?) and those that fairly represented all feedback we received. Remember, these comments are housed in Premium Access meaning that some opinions may not be quite ready for mass consumption. You should assume that any unfavorable opinion could be effectively refuted by the company named. Donald E. L. Johnson, Chairman, The Business Word Inc. Printcafe started out as an e-commerce startup that planned to make the Internet work for printers and their customers. Today, it seems to be a holding company for a collection of workflow and estimating software products that Printcafe has acquired in a mini-rollup. Since its initial public offering last year, the company's stock has lost most of its value as investors realized it doesn't have the financial or human resources it needs to become a growth company. As it stands, Printcafe probably could make a decent profit, but its growth opportunities are limited unless it gets a new cash infusion or is acquired by a bigger company. Creo and EFI are fighting to be Printcafe's white knight because they see opportunities to leverage its technologies and its customer base, and because they don't want competitors to acquire the company. What does this mean for printers? It depends on which Printcafe product a company is using and whether that product offers growth and cash flow opportunities to the new owner. A lot depends on the personalities of all the executives and managers involved, and few outsiders are in a position to guess what the new corporate culture will produce. I've seen a lot of big companies mess up good acquisitions, and I've seen them take struggling little outfits and turn them into big winners. Nobody can predict the outcomes of mergers and acquisitions, but in 70% of such deals, the shareholders of the acquiring company come out on the short end of the deal. As a PrintSmith owner, I hope the buyer can turn Printcafe into a winner. Bob Metzger, ICED As it pertains to the pending bids for Printcafe by EFI and Creo, the strategy by both companies is sound. In today's print environment equipment is becoming the least complex piece of the puzzle, and selecting equipment is perhaps the easiest part of the decision-making process when changing technologies. The need for a complete turnkey work process is imperative in today's business and I believe that it would make a good addition to either firm, depending upon how it is integrated into their existing business model. Damon Lincourt, Digital Prepress Team Leader, RR Donnelley - Roanoke Mfg. Plant I think the markets from which each of the respective bidders come says much about their prospects as owners of Printcafe. EFI is strongest in products and solutions for smaller markets, creative departments, service providers, etc. Creo is already strong in the medium to high end commercial printing space. Thus, I would have greater confidence in Creo's ability to leverage Printcafe in addressing the needs of that market. EFI would have to spend time and effort learning that market and assimilating a Printcafe team that's already targeting that market. Basically, I think Printcafe under Creo would keep up the momentum they have, while Printcafe under EFI would be slowed by the need to bring the parent organization into unfamiliar territory.