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Creativepro, an ImageX.com Company, On the Block

Press release from the issuing company

5/26/01 (WhatTheyThink.com) According to sources within ImageX.com and those who have spoken to the executives there, ImageX.com is quietly seeking a buyer or partner for their Creativepro.com business unit. ImageX.com purchased the company in June of 2000 as a way to "grab a foothold across the full online design-to-print spectrum." Creativepro.com is the largest vertical Web portal providing online information, products and e-services to creative professionals. At closing, the deal was valued at $40 million with $11.5 million in cash and the rest in stock. Creativepro.com had 120 employees and $21 million in revenue in 1999. Much of the revenue was from the Extensis Products Group which was part of Creativepro.com. Extensis sells software including Preflight Pro and font manager Suitcase 9 to creative professionals. ImageX.com said they would tap Creativepro.com's database of creative users. At the time, Rich Begert, CEO of ImageX.com, said the deal would help the ASP reach out to creatives who influence 80% of print buying decisions. In November 2000, ImageX.com split Extensis and Creativepro.com into separate business units. Each promotes the other, but has their own identity and operating budget. Sales are reportedly way down in the Extensis Products Group and the sluggish ad market that Creativepro.com partially relies has pressured ImageX.com to examine options. Sources said ImageX.com has never been able to take full advantage of the neutral community. "ImageX has learned the hard way that it's difficult to move members of one culture into the revenue stream of another - even if owned by the same company. There should have been a complete integration," one source said. Pressure from the financial community has also played a role in ImageX.com's situation. After closing down PrintBid.com in February of this year, the company announced an across the board cost reduction. The measures are expected to reduce their cash operating costs by $10 million this year. In the announcement, the company said they would layoff 17% of their workforce. Sources said Creativepro.com was not spared from layoffs but has not affected the performance of the site. In their third quarter financial release, ImageX.com praised Creativepro.com and the site's traffic. According to the release, "Unique visitors increased quarter over quarter, by 36% to over 315,000. The number of referrals from search engines increased from the second quarter to the third quarter by 145% to 217,000 referrals and page views increased by 25% to more than 2.4 million for the quarter." Sources say traffic to the site continues to rise and reportedly has nearly 100,000 registered members. The company generates revenue from ad placements around free services, revenue sharing with companies like Random Eye Technologies and an online store. However, ImageX.com has virtually no mention of Creativepro.com in their financial releases for the fourth quarter or the first quarter of 2001. Sources said the company is looking to focus their financial assets on their core business which is the ASP print procurement model. ImageX.com has spoken with a few companies about partnering or acquiring the community and Creativepro.com is "near break-even but is not first in line for capital from their parent." Senior executives at Creativepro.com declined to comment for this story. ImageX.com CEO, Rich Begert, would only say they are not shopping Creativepro.com. "I would say that is not accurate, however we would examine opportunities and strategic alliances that would enhance any of our businesses and bring shareholder value." In an interview with WhatTheyThink.com in February, Begert said they would examine each segment to control expenses and reach profitability. "We are aggressively cutting our expenses to bring more value to shareholders. As seen in our recent announcements, we will examine every area of our business to quickly achieve profitability without sacrificing our quality services.” Said one source, "When your division gets left out of financial releases, that's usually not a good sign." But for someone, it could be an opportunity.

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