Reprographics 101

Recovery Missing Normal Expectations

March 1, 2012

By Christine Benz| 2-23-2012 3:00 PM (article that appeared on Morningstar Research)

Christine Benz: I am Christine Benz for Morningstar. I am here at the Morningstar Ibbotson Conference, and I had the opportunity to sit down with William Strauss. He is a senior economist at the Federal Reserve Bank of Chicago, and he shared his views on the economy and what he sees as the potential headwinds and tailwinds to an economic recovery.

Christine Benz: Bill, thank you so much for being here.

William Strauss: Happy to join you.

Benz: You are here to talk about the state of the economy, and I am hoping you can kind of summarize what you will discuss in your presentation. I think there is a general consensus that there is some strengthening in the economy, maybe not as much as one would hope, but still strengthening. Is that your general view?

Strauss: Yes. We certainly saw some improvement for the U.S. economy as the year came to a close, and that has continued into the early part of this year. That being said, the expectation is for growth this year to be roughly around trend rate of growth next year, perhaps a bit better than that, but still not the type of recovery/expansion period that you would typically expect given that we went through one of the deepest drops in economic activity that we’ve seen since the Great Depression.

Benz: What do you think have been the key impediments to the economy not strengthening at the pace one would hope?

Strauss: So, I think in large part it’s really the whole financial crisis. Carmen Reinhart and Ken Rogoff went ahead and wrote the book, This Time Is Different. What they were basically highlighting is that, unlike any other recession that we’ve had since the Great Depression, this one has been associated with a financial crisis. What we’ve seen is that recovery periods that are associated with financial issues tend to be far more muted than a typical type of recovery. There is very little pent-up demand. In fact, leading us into this was just probably an overconsumption in particular of housing. So, this time around we are seeing absolutely no contribution to the recovery coming from the housing sector, which is very unusual.

Benz: You noted that still-tight credit is another headwind here.

Strauss: So you look at the banks’ balance sheets, and these firms are sitting on a lot of deposits. The question is why is that the case because historically banks have these excess reserves. It has been much more profitable for banks to lend that cash out, charging an interest rate higher than what they are paying the depositors, and that–on a risk-adjusted basis–is how they make their money. They are not doing it at this point, and I think that’s occurring for a number of reasons. Some of it has to do with supply. You look at the number of underperforming assets that are out there. We mentioned the housing sector, and there’s probably still a year’s worth or more of an excess amount of homes out there. So, if you are looking at a marketplace where there is excess supply of homes, you can’t imagine there is great willingness on the part of a lender to lend to a builder that plans to build an extra 200 homes in a development.

So, I think for those kinds of risky issues at this point, there is some hesitancy there. In addition, with commercial real estate, we see similar things with the vacancy rates still being quite high. Then on the demand side, we have an economy which is expanding but not setting the world on fire. Since the recovery expansion began in the middle of 2009, growth has been roughly at trend rate of growth. This is, again, well below what we would typically expect. For example, during the mid-1970s and the early ’80s, growth for a three-and-a-half-year period was well north of 5% for that entire period, significantly above what we thought of as trend.

With the fact that the economy is not taking off like a skyrocket, companies are really being very hesitant to want to expand capacity, wanting to push their businesses, and wanting to take on debt. I think when you look at those companies that put themselves in an overleveraged position, they got themselves in trouble. So, I think that we are in a state right now where there is this preference for being very cautious with regard to debt.

Benz: How about consumers?

Strauss: I think in a similar vein there. We have an unemployment rate that is above 8%; incomes are rising but not very rapidly. Consumers similarly were put into a position of having too much debt, and some of their main assets have really taken a hit on values, such as their homes, which are down about 30% nationally, and in certain markets they are down by more than 50%. Down here in Florida, this is one of the key states that has seen tremendous loss of value of homes. And the stock market is another factor. Granted we’ve been on this great bull market run since March 2009. But unless you put your money in the market in March ’09, unless you’ve been riding this horse all the way through, we’re still well below the levels where we were back in 2007. So, investors look at their 401(k)s and their other assets that they have perhaps invested in the stock market, and they are just not feeling all that wealthy relative to 2007.

Benz: Bill, I know a big focus for you at the Chicago Fed is the manufacturing sector. There has been a lot of excitement about what’s been going on in Detroit, and I’d like your take on that area and the strength of manufacturing overall?

Strauss: So, here I can be a lot more positive. Manufacturing output was at a record-high level in December 2007. This persisting view that we no longer make things in this country is totally false. We were producing more than ever, more than China back in December ’07. Then we had the Great Recession. Although we saw of drop of 5% in economic output nationally for gross domestic product measurement, it fell much more significantly for manufacturing with a loss of more than 20%. One fifth of the business gone.

This was quite dramatic, but I should also highlight, when you decompose it, the industry that really took the biggest hit was, as you mentioned, the automotive sector. So, Michigan was severely affected, in particular. In addition, the primary- metals market took a hit. You need steel and aluminum to go with the vehicles, so it kind of goes hand-in-hand. But the two industries that are now really recovering much more rapidly than the others are automobiles as well as primary metals–steel and aluminum. So, we are getting that kind of tennis-ball bounce by sector.

That being said, for overall manufacturing, it is really doing quite well. Rather than growing at trend as we’re seeing for the overall economy, it’s growing at more than twice its historical trend rate of growth. It has been expanding now for 31 months. It has seen an average annualized growth rate of 6.3%, recovering nearly 70% of the lost output.

The pace is probably going to slow. It probably won’t be growing at 6% during the next couple of years, but my personal view is that it might be closer to 4%. But with the rapid kind of pace continuing, probably sometime next year we’ll begin to see, once again, an all-time record-high level for manufacturing output in this country.

That being said, this rebound that we’re seeing in manufacturing has allowed the economy to actually add jobs for the first time in a long time. But we’re adding jobs to a degree because with that 20% drop, we cut 2.3 million workers out of manufacturing. One in every four jobs that were cut was in manufacturing. This is an industry that represents less than 10% of the workforce. So, they have the lion’s share of the hit for those unemployed workers.

At this point in time, they’ve only added back 400,000 workers, so there are still roughly 2 million workers in manufacturing who lost their jobs who have not gotten them back. So, we’ve got 70% of the output back, only adding less than 20% of the workers. It’s a story of productivity, and this is something that has gone on for decades in manufacturing and one of the reasons why the number of people as a share of the economy employed in manufacturing has continued to fall during the last 60 years.

Benz: So it’s good news for the manufacturing sector in general, but bad news for people who work?

Strauss: Just in terms of the numbers. It is interesting though. You talk to the manufacturers who say they would like to hire more, and that 400,000 level would probably be a better number than it currently is. I don’t think we are talking job growth in the millions by any stretch of the imagination, but employers say that they have difficulty finding the skilled workers to fit the skills that they are desiring in this

21st century-type of manufacturing environment. So, you begin to wonder what about these remaining 2 million workers; why aren’t they fitting the bill? It’s not an easy thing to answer. Probably some of them do not have the kind of computer- numerical-control knowledge because the companies that they were working at– maybe they were the ones that went out of business–were maybe not the most sophisticated and not the most productive. So, those people might have a difficult time.

In addition, whenever you visit any manufacturing plant, one observation I’ve made is just the fact that it tends to be an older workforce. Typically, a lot of people are in their 50s. It could very well be that during this downturn, many of them just said, “I am just going to retire. I am not even going to bother trying to look for another opportunity.” It could be a bit of that kind of activity taking place.

Estimates are–and I don’t know how good these are, these are just from people who throw these numbers out–that there could be as many as 600,000 unfilled positions. Even if you can fill every one of those, and assuming that’s correct, that would still only represent 1 million workers when factoring in the other 400,000. This is still a shortfall from the 2.3 million that we had lost during the downturn.

I am optimistic for manufacturing rising and probably with that, some employment opportunities in manufacturing. But as we have seen over the decade, since it’s being driven by productivity, the manufacturing sector is not going to be a major employer for the U.S. economy.

Benz: Right. So, we’re seeing a human cost there. Last question for you, Bill, I’d like to talk about one or two of your favorite economic indicators. You always hear about Warren Buffett looking at railcar volume. Do you have some favorite statistics that you look at to gauge the economic health?

Strauss: I think in terms of looking at the overall economy and how it’s doing, I actually really enjoy–and it’s not just because it has the Chicago Fed moniker attached to it–an indicator known as the Chicago Fed National Activity Index. Even though it’s called Chicago Fed, it’s not a regional indicator. It’s an indicator for how the nation is doing as a whole.

Its advantages are that it comes out monthly, so we just recently got the January release this past week. The way the indicator works is that we are taking a whole host of different economic series and put it into a black box model. They kind of fight amongst themselves to determine how the economy is doing vis-a-vis trend.

Manufacturing still plays a major role within that because manufacturing largely does a large job explaining volatility in the economy, as that one example I gave about the 5% versus 20% drop.

This National Activity Index, when it has a reading of zero, it means that the economy is growing near its roughly trend rate of growth, which is something in which we’re interested. When it’s below zero, it doesn’t mean that the economy is declining, but it means we’re underperforming what we’re capable of doing. Now, if it slips down too far below zero, typically around a minus 0.7 to a minus 1.3 that has historically been associated with a recession, meaning that the growth has now slowed to become actually negative growth.

Now, what’s the most recent reading on this? In January, actually it popped slightly above zero, so we’re hopeful that, as we talked about at the very beginning, the strength that we’re seeing in the economy is being reflected in this indicator. So, I do believe it’s real. Hopefully it can be sustained as we move into 2012, and maybe we can have an output that might be better than trend.

Benz: Bill, thank you so much for sharing these insights. We very much appreciate you taking the time to be here.

Strauss: Wonderful. Thank you.

Warning: Cloud Could Bring Storm

March 1, 2012

The article below was distributed to members of the AICPA (American Institute of Certified Public Accountants). I’ve decided to post this article on my blog because many of the issues CPA’s and their clients face – about “Cloud Computing” – are very similar to, if not the same as, the issues that Reprographers and their clients face.

“Warning: Cloud Could Bring Storm”

Storage of data is moving to the cloud. Make sure you know

the risks and how to avoid them before lightning strikes.

February 27, 2012

 by Jason Rosenthal, JD and Nicholas Gowen, JD

Cloud computing may sound transcendental, but it actually is nothing new. It is simply a trendy term to describe Internet-based computing services. Cloud computing allows businesses and individuals to use the Internet to access software programs, applications and data from computer centers that third-party vendors manage.

But there are perils in the cloud. Servers can be hacked, destroyed by natural disaster, or attacked by a computer virus, which can lead to data being breached, lost or otherwise compromised. While cloud computing — and particularly data storage — presents many advantages and likely will become more prevalent, there are unique risks to CPA firms and their clients. This column analyzes some of these risks.

Confidentiality and Data Security Concerns

Whether you are storing your CPA firm’s own data or that of your clients, confidentiality and security issues are of paramount concern. There are limitations to protecting the confidentiality of your firm’s data when dealing with third-party vendors, and the risks of unauthorized disclosure of your firm’s sensitive data by cloud providers can be significant. (Editor’s note: According to Generally Accepted Privacy Principles, confidentiality refers to the protection of non-personal information and data from unauthorized disclosure, while privacy is about the protection of personal information).

This article, much like other electronic data in cyberspace, may long outlive the lives of its authors. Thus, it is important to remember that, unless the data is properly deleted or otherwise purged, it may remain in cyberspace longer than intended. CPA firms need to keep this in mind and act accordingly when entering into contracts with cloud providers.

To protect data confidentiality, be prepared to negotiate specific contractual terms before uploading data into a cloud storage system. CPA firms should consider factors such as:

• Whether the provider will segregate your data;

• Whether the provider will access, use or copy data for its own purposes;

• Whether the provider will delete or return your firm’s data at your request;

• How the provider will adequately purge data to ensure that confidential information is not compromised; and

• What the cloud provider’s obligations are to notify your firm of a potential data breach.

CPA firms need to be concerned about security lapses in cloud data storage systems. Major data breaches are continuing to occur at an unprecedented pace, affecting millions of customers. In January, Amazon.com-owned clothing and shoe retailer Zappos.com revealed that a hacker had gained access to account information on more than 24 million customers. Last year, one of the largest cyberattacks to date breached Sony’s PlayStation Network and compromised data on 77 million customers.

When a data breach occurs, the implications can be disastrous (see Insurance Coverage for Data Breaches).You should establish preventative and back-up measures to protect the integrity of your firm’s data and that of your clients. Ensure that your service provider offers advanced security capabilities that include:

• A high level of tested encryption technology to ensure the shared storage space safeguards all data;

• Stringent access controls to prevent unauthorized access to the data;

• Scheduled data backup and safe storage of the backup media; and

• Business continuity and disaster recovery solutions.

Intellectual Property Issues

As the U.S. economy has transitioned from a manufacturing base into the information age, the legal system has also been forced to adapt. Property law concepts in existence for centuries are now being applied to modern day concepts. Be aware that courts do not generally consider a distinction between the content of data stored electronically in the cloud and the data stored in paper files in your storage room. For example, in Thyroff v. Nationwide Mut. Ins. Co., 8 N.Y.3d 283 (2007), a New York appellate court held that a party could sue for conversion of intangible electronic records that are stored on a computer. The court recognized the intrinsic value of both electronic and print documents and declined to draw a distinction between electronically stored information and printed documents for these purposes. Similarly, several courts have held that electronic information stored on computer disks, magnetic tapes, and audio files and even data sent via electronic signals are protectable property rights.

Moreover, the data that your firm stored may constitute trade secrets, copyrighted work or other materials that U.S. intellectual property laws protect. If your firm’s cloud resides off-shore in another country, the laws of that country may not provide adequate protection if someone else obtains this information.

Concerns Regarding Compelled Disclosure to Third-Parties

CPA firms also need to be aware that cloud providers may be compelled to disclose their firm’s data and their clients’ data if the provider is served with a civil or criminal subpoena or search warrant.

Government officials can use current U.S. law — including the Electronic Communications Privacy Act, the Stored Communications Act and the USA PATRIOT Act — to obtain your clients’ data that is stored on cloud servers. Although cloud-based computing was not considered when these statutes were enacted, they are being used to gain access to data in the cloud, possibly without notice being given to the owner of the data. For example, in 2010 FBI agents served Google with a search warrant demanding e-mail and “all Google Apps content” for an alleged criminal spammer. Google reportedly produced the requested files 10 days later, including many incriminating documents that were stored on the suspect’s Google Docs account. Although the original search warrant was issued under seal, the FBI publicly disclosed its actions in a follow-up search warrant affidavit filed in federal court in Denver in 2011 (In the Matter of the Search of Yahoo! Inc, 10-sw-5056-MEH).

Moreover, the law is currently unsettled regarding whether Fourth Amendment protections even apply to data stored in the cloud, as opposed to data stored locally or in print. Thus, you and your client may be unable to prevent disclosure of sensitive information stored in the cloud that may otherwise not be disclosed if stored on a local server. This is notwithstanding the previous discussion regarding courts finding no general distinction between the content of electronic and paper documents.

CPA firms need to be aware that their clients’ data stored in the cloud may not be protected from compelled disclosure to the government or civil litigants. Thus, you should consider the ramifications of uploading sensitive data to cloud servers.

Jurisdictional Issues

Although your data may be stored in the cloud, that cloud — or at least a corresponding server — has a physical location. It may be in another state or even another country. Moreover, the cloud can move. The provider storing the data may itself move or may decide to relocate your data to a server stored in one of its other locations. While you should be able to access your data from anywhere, chances are you may not know the location of the physical server being accessed.

Cloud service contracts may provide that any disputes arising out of the service agreement are to be resolved in a foreign jurisdiction. Whether that means another state, or another country’s legal system altogether, it may present unique challenges if the parties need to turn to the court system to resolve a dispute.

Pay particular attention to whether the contract contains a venue or choice-of-law provision, and consider whether it will be problematic. Litigating in foreign venues can be a significant disadvantage to your CPA firm.

Regulatory Concerns

The jurisdiction in which your data is stored may have different regulations than the U.S. For example, countries’ privacy laws vary and may affect the ability to access data.

Sarbanes-Oxley and other laws may require a company to audit certain information. This may include information that is stored on a cloud server. Thus, CPA firms and their clients need to make sure up front that they have any necessary audit rights.

Conclusion

Cloud computing presents opportunities for managing data, but it also presents risks. Before your CPA firm blindly flies off into the cloud, take proper steps to protect your firm and its clients.

Ricoh Adds Colour to Its Wide Format Portfolio

March 1, 2012

Thursday, March 01, 2012

Press release from the issuing company

Ricoh Europe is unveiling a unique four-colour wide format printer designed to address the CAD market. The Ricoh Aficio™ MP CW2200SP features Ricoh’s Liquid Gel™ ink and is ideally suited for a variety of industries, including manufacturing, architecture, engineering, construction, planning authorities and product design. It is also expected to meet the demands of the print room and quick print markets. Because of the quick drying properties of Liquid Gel ink, the system provides high productivity, minimises blurring and produces superb line accuracy. The new printer will be available by autumn 2012.

The CAD market has traditionally been served by black and white devices. However there is a shift towards on-demand premium quality, colour prints. For example, architects using colour to make their drawings easier to read, may highlight areas such as electrical details in red or water infrastructure in blue. With the MP CW2200SP they can also quickly produce drawings and other documentation onsite, whenever required. This type of immediacy makes it easier to update and produce new revisions quickly, helping to reduce the risk of costly errors occur due to outdated documentation.

An in-built colour scanner on the MP CW2200SP allows customers to digitise hand-drawn documents and archive older documents. The scanner offers an improved total cost of ownership and space saving when compared to other colour offerings on the market, particularly businesses that are using separate systems for colour printing and scanning.

Environmental impacts are minimised with a 40-second warm-up time and the MP CW2200SP uses as little as 10% of the power that other printers in its class consume. Productivity is maximised with an easy to maintain device and intuitive interface. It runs at print speeds of up to 1.8 A0/min (b/w) and 0.6 A0/min colour. Its rapid warm up performance enables it to print the first five sheets faster than existing LED and inkjet models in its class. For added convenience it also features a USB port, where documents can be saved, stored and accessed without the need for a computer.

Flexibility is enhanced with a maximum print width of 914mm for prints larger than the A0 size and a suction-fed paper handling feature ensures that the paper is loaded more easily. It can also hold a 20-sheet stack as standard and a second roll for efficient feeding of substrates.

The MP CW2200SP is one of the live demonstrations on the Ricoh stand at drupa 2012, Dusseldorf, Germany in Hall 8a, 3 to 16 May.

Visit ww.ricoh-europe.com for news and updates.
Service Point Solutions Announces Results for Full-year 2011

March 1, 2012

This morning, Service Point Solutions (SPS) issued a Press Release to announce its financial results for the full year 2011. Unfortunately, I found (on SPS’s webs-site) only a Spanish-language version of the press release.

For those of you who read Spanish, here’s a link to the Spanish-language version of the Press Release (feliz lectura!)…..

http://tinyurl.com/76qm6t2

For those of you who do not read Spanish, I used Google-Translate to create an English-language version of the press release. Note that Google-Translate does not do a perfect job. In addition, I could not translate the tables and graphs that were in the Spanish-language version of the press release, so, if you want to see the tables and graphs that were in the press release – and I would encourage you to look at them – click on the Spanish-language version of the press release (see above for link).

Okay, here’s the English-language version of the press release:

– – – – – – – – – – – – – – – –

Service Point increased its sales by 6.4% in 2011

• The company specializes in information management and documentation, reached sales of 218.6 M €.

• EBITDA stood at 64% above that obtained in 2010, reaching € 14M.

• Sanitation of the goodwill on its investment in Spain, the USA and the Netherlands by 27.5 M €.

• Integration of Holmbergs, Swedish company acquired during the year has been positive and this subsidiary has strengthened the group’s leadership in Scandinavia and has contributed to improved operating results.  

February 29, 2012. – Service Point closed 2011 with net sales of 218.6 M €, representing an increase of 6.4% over the previous year.

In a context in which its main competitors have experienced a drop in sales figures, the company achieved an increase in its market share thanks to the continuous development of new services such as online printing platform B2C, Print Oasis, websites print graphic design and image development services photo albums and the transformation of some of the service centers to custom printing. At the same time, Service Point has made a bid to strengthen relations with its customer base and streamline B2B printing activity on demand.

Geographic diversification is one of the keys to the better position the company in the sector and its ability to withstand market swings.

2011 Sales by geographic area, variation from 2010 and% of sales totals

United States has shown an evolution of “low to high” throughout the year with fourth quarter significantly better than the same period in 2010.

The acquisition of Holmbergs in Sweden has been successfully integrated in 2011 and has been a decisive step towards consolidating the presence of Service Point as the leading digital printing company in the Scandinavian market.

UK business behavior has advantages over the competition mainly within its financial business.

In Central Europe (Spain, France, Belgium, Holland and Germany) developments has been mixed. Spain has decreased sales due to lower customer demand, while Germany has grown thanks to the dynamism of the business of photo albums. In the Netherlands has increased the services business activity related to mail management (mailroom and postage).

Gross margin has been placed online to our objectives with the exception of business in the Netherlands where the weight of the activity of the lowest postage and printing activity of our clients have worsened slightly in order to gross margin of the subsidiary. Gross margin was 63.1% versus 66.6% obtained in 2010 (excluding postage line in the Netherlands the gross margin in 2011 was 68.6% versus 71.0% in 2010). The company has continued its policy of demanding operational cost reductions which offset the reduction in gross margin operating cost base has been reduced by € 4.5 million in comparable terms over 2010.  

EBITDA grew by 64% compared to that obtained in 2010, reaching € 14 million, assuming an improvement of 5.5 M €. Operating profit was of 1.8 M € compared to an operating loss of € 2.5 million last year.

Taking into account the environment and the negative forecasts for 2012 for most developed economies Service Point has decided, following a prudent approach, by undertaking a reorganization of part of the goodwill of our investments in Spain, USA and Holland to properly reflect the net book value in relation to anticipated results of their business plans over the medium term cleaning up goodwill totaling € 27.5 m. Amortization of goodwill is an accounting record does not affect the operational running of the business or its cash position, or the solvency purposes is considered as an extraordinary outcome.

Evolution and Development of the Business Model

During the last quarter, the company strengthened its management structure to focus the direction of business in strategic areas and creation of value.

It has created a global address for e-commerce activities and online grew 30% in 2011, have established four geographic directions to better meet the dynamics of markets in the countries where Service Point (Scandinavia, Continental Europe, UK and U.S.) and have strengthened the core functions with a new global marketing management and international purchasing function.

In geographical terms this structure will strengthen the focus and synergies and efficiencies both operationally and in terms of international clients.

Negotiations Syndicated

Service Point is currently negotiating with the banks that make up its syndicated a long-term financial structure to replace the current maturity of which is expected in July 2013. To date, negotiations are progressing positively and the company expects to conclude within the next two months.

– – – – – – – – – – – – – – – –

Blog Publisher’s comments:

Although SPS does (in the press release) make mention of its acquisition of Holmbergs in 2011, the press release does not make it clear that most of SPS’ 2011 sales increase resulted from the Holmbergs acquisition deal. Without that deal, SPS’ 2011 sales would likely have been “flat” with 2010 sales. However, even though that (i.e., flat sales) may be the case that, to me, is not all that bad. 2011 was not a particularly great year for any company involved in the reprographics industry, or, for that matter, in the printing industry. Any company that “simply” held its own in 2011 should, I think, take a bow.

When SPS released its Q1 2011 financial results report, SPS did say this about its acquisition of Holmbergs…..

“Holmberg’s Acquisition: Service Point closed the acquisition of Holmbergs in Sweden on 30 April 2011. Holmbergs is the leading provider of digital print and document management services in southern Sweden (Malmo and Lund) and northern Denmark (Copenhagen.)”

SPS went on to say…..

“Acquisition Highlights: The acquisition will boost 2011 revenue by 6% and EBITDA by 9%, in line with Service Point’s targets, we well as being significantly EPS accretive.”

SPS’ USA 2011 sales came in at 16.508 mil Euros. That’s about 8% of SPS’s total (worldwide) sales. As I’ve pointed out in one or more previous articles on this blog about SPS, SPS’ USA division, in its heyday (when Mark DiPasquale was President of that division) had sales of around $43 mil (USD.) I’m sure you can do the conversion math on your own, then do a comparison of “before” and “now.” (I’m having dinner with Mark in Boston, tomorrow night.)
President of Canon Business Solutions resigns

February 28, 2012

This message is to inform you that Tod Pike has resigned his position as President of Canon Business Solutions, Inc. in order to pursue another opportunity. Over the past 18 years, Tod has contributed to our success in several leadership positions including President of MCS, Executive Vice President of Canon Canada, Senior Vice President of ISG and as President of CBS.

Please join me in wishing Mr. Pike success in his new endeavors.

As Chairman and CEO of Canon Business Solutions, I will also assume the duties of CBS President effective immediately. I will delegate my responsibility as the leader of the CBS Sales function to Toyo Kuwamura until a more long term solution can be arranged. The functional areas of Budget and Human Resources will permanently report to Mr. Kuwamura effective immediately.

I look forward to spending more time with the people of CBS as we work together to reach our 2012 goals. Please support me in this effort.

Joe Adachi

President and CEO

Canon U.S.A., Inc.
Autodesk (ADSK) earnings-call transcript; comments about AEC

February 27, 2012

From the comments made by Carl Bass, Autodesk’s CEO:

Fourth quarter revenue was driven by growth across all of our major geographies, with particular strength in Americas. All of our businesses performed well, driven by demand for our suites. We achieved record results in several areas, and we made solid progress in advancing our operating margin and EPS.

There were several areas of notable growth and achievement during the quarter, including 12% growth in total revenue; 25% growth in total suites revenue; 18% growth in revenue from commercial new licenses; record revenue levels in AEC, Manufacturing and the Americas; record maintenance billings in deferred revenue; 360 basis point improvement in non- GAAP operating margin; 31% growth in non-GAAP EPS; and solid cash flow from operations.

We also continued to see our investment in the government vertical payoff. We won some high profile contracts with large federal and international agencies. We recently closed deals with the Brazil National Department of Transportation Infrastructure and the New Mexico Department of Transportation. In only 2 short years, we have won 6 state DOTs, and we believe that we can further expand our business in this sector.

So to wrap things up, the fourth quarter was another strong quarter, capping what was a terrific year of consistency and growth for Autodesk. We’re confident in our ability to deliver continued double-digit growth in FY ’13 as we focus on our 5- year targets of 12% to 14% revenue CAGR and operating margins of at least 30%. And finally, I want to thank our employees and partners for their outstanding efforts and essential role in delivering these great results.

From the analyst Q&A session:

Operator

Your next question comes from the line of Steve Ashley from Robert W. Baird.

Steven M. Ashley – Robert W. Baird & Co. Incorporated, Research Division

I would just like to drill down on the AEC business. The assumption, I guess, is that the U.S. was probably very strong. But could you comment on how the AEC business was in Asia Pac and EMEA, and what your kind of outlook is for the business in those markets?

Carl Bass

Yes, it certainly was strong in the U.S., and we were seeing some form of recovery in the AEC market in the United States. We’ve really hit the tipping point with BIM or building information modeling. I mean, we’ve hit the point where there’s huge amount of demand from owners. It’s being mandated by government agencies. And as we’ve always talked about, the drivers — to a large extent, the place where most of the money is spent is in the construction part of AEC. And what we’ve seen around the world definitely differential rates. But worldwide, we’re seeing the adoption of BIM technology. And so for example, historically, Japan has been a laggard with respect to the adoption of technology. They’ve been primarily doing 2D technology in AEC. And just in the last year, we’ve seen the leading firms, the genecoms [ph] in Japan all adopt BIM technology. So that’s a dramatic change that, again, like I talked about before, has a huge spillover effect for the entire industry. And I’ve said it before, say it again, it’s no longer a question of if, but really of when people will be doing 3D modeling and simulation and visualization in AEC. And so I think we’re just in the sweet spot of the adoption. Certainly, the macroeconomics in each of these countries affects it on a quarterly basis. But if you kind of stand back and squint, you can just see broad adoption of a new way of doing business.
Leading-edge Document Management, Reprographics, Scanning and Archiving Services and Cloud Distribution and Storage services – brought to you by

February 27, 2012

Dudley’s Blueprint Service ….. or by Speedy Repro, or by Bobby’s Quick-Print, or by Andy’s JiffyPrint.

From a branding perspective, is the name of your company important or is it a non-factor? And, if it is important, than does your company’s name reflect the image that you want to, need to, present to prospects?

While I certainly do realize that tradition is important (and I, myself, am quite nostalgic) and, like you, understand that your “customers” know who you are, know what you offer, and know how you go about your work – growing a company requires one to attract new business – I’m talking about firms referred to as “prospects”, people you do not do business with, but would like to.

Prospects do not know who you are. Their first impression of you will come from the name of your company. Does the name of your company create the perception, in the minds of prospects, that you are the company they should choose to do business with? Or, does it create the perception that you are stuck back in the 80’s, 70’s, or worse, the 60’s or 50’s?

My mom used to say “you can’t judge a book by its cover.” But, while that may well-apply to dating, I certainly don’t think that statement applies to branding and perception.

When’s the last time you gave some though to rebranding, changing the name of your reprographics company?
Digital Services and the Reprographer

February 27, 2012

In the transcript of the ARC earnings-call last Tuesday, Suri mentioned ARC’s revenues from “digital services”…..

“Our revenue mix for the fourth quarter had reprographics delivering roughly 51% of our overall revenue; Facilities Management or FM delivering roughly 25% of our revenue; equipment and supplies delivering approximately 15% of our revenue and digital services delivering roughly 9% of our revenue. The revenue mix for the full year of 2011 has reprographics delivering approximately 54% of our overall revenue; FM delivering roughly 24% of our revenue; equipment and supplies delivering roughly 13% of our revenue and digital services delivering approximately 9% of our revenue.”

9% of $422 million is approximately $38 million. That’s a nice chunk of change, and, as most know, margins are generally higher on digital services than they are on “other” services reprographers offer.

Not too long ago, I put up a post on the blog about “charging for digital services”, and, in that post, I urged Reprographers, who had not already done so, to read the IRGA publication, “Digital Services and the Reprographer” – the IRGA’s “digital services guide” – which was published in the latter part of (I think) 2006. That publication was (and still is) an outstanding piece of work. Contains great ‘food for thought’ for reprographers, especially for those who have yet to begin charging for digital services. (That publication is not a short read, it’s about 20 pages long.)

The above-mentioned publication is available to IRGA members. (Membership in the IRGA is cheap!) For those of you who have yet to read this publication (or, for those of you who have forgotten what was said in that publication), here are a few of the paragraphs from that publication:

“There has been much focus on charging for digital services. As the market becomes commoditized and margins get squeezed, reprographers must find other ways to increase margins. Invoicing no longer shows only X number of prints at $.XX/sf, but rather services ranging from file manipulation to data storage and management. So many things we do are now invisible, and not easily seen by a customer. The best way to slow down the commoditization of our offerings is to establish that there is a value to each and every line on an invoice, and not having to sell on price alone.”

“Giving away digital services to get more printing is like burning your furniture to warm your house.”— S.“Mohan” Chandramohan

“Creating, explaining, and understanding the value of these services is one of the most important components of this new digital age. Sales people who cannot sell the value of these services will leave money on the table. Often, “old school” customers are the hardest to convince of the value of these services.”

“Some in our industry have suffered because sometimes new technologies we offer call for us to explain and sell the VALUE of the services that take traditional reprographers outside of a comfort zone.” — Casey Simpson

“At this point, we can say that very few reprographic companies are currently getting rich from digital services revenue. However, all digital revenue is a plus if you consider the alternative. Numbers range from 3% to 18% of total revenue coming from digital services.”

Now, I’d like to bring some closure to why I’ve put up this post. ARC’s mention of its digital services revenues was what provoked me to write this post. But, even reprographers who understand the importance of not giving stuff away, have, I suspect, not “fully implemented” charging for digital services. And, some of that non-action (or, should I call it “inaction” or “hesitancy”) is, I think, caused (or influenced) by “discussions” like this one …..

The other day, while doing some Google research related to the reprographics industry, I came across a blog-site known as “beyond the paper”, where there was a discussion about dwf files and reprographers who charge, or don’t charge, for processing dwf files prior to printing dwf files. This discussion took place back in 2006, so, yes, it is an old discussion. But, the thoughts expressed by the author of the articles is, I think, still relevant today, meaning that there are reprographers who charge for processing files (and not just for dwf files, but other types of files as well) prior to print, and there are customers who are aware that some reprographers charge for file processing (and for file-to-file conversion) and others do not. Frankly, I was somewhat amused by the fact that some reprographers, in 2006, were not charging for file processing (of all file types) prior to print, and I say that because 2006 was an incredibly strong year for all reprographers and, when there is a strong year, pricing-power comes with that. If you don’t use pricing-power when it’s there for the taking, shame on you!

Okay, here’s the discussion that I found; it is contained in several different posts and, below, I’ve provided links to each post (and I think they are in chronological order.) One of the links will take you to a document that is a chart that shows a comparison of different file types.

Comparison of Commercial Printing Formats

http://dwf.blogs.com/beyond_the_paper/2006/02/february_17_on_.html

Comparison of Commercial Printing Formats

http://dwf.blogs.com/articles/rgformats.htm

Why is my reprographer trying to charge me more for processing DWF files?

http://dwf.blogs.com/beyond_the_paper/2006/08/why_does_my_rep.html

PLP Helps Our DWF Survey

http://dwf.blogs.com/beyond_the_paper/2006/08/plp_helps_our_d.html

Reprographers Who Don’t Charge More for DWF: They’re Out There

http://dwf.blogs.com/beyond_the_paper/2006/09/reprographers_w.html

Okay, one last comment …. Above, I mentioned the IRGA digital services guide. It is a must-read for reprographers.
Buffett admits being ‘dead wrong’ on timing of housing recovery but remains optimistic overall

February 26, 2012

By Associated Press, Published: February 25, 2012

OMAHA, Neb. — Billionaire investor Warren Buffett said Saturday that he was “dead wrong” with a prediction that the U.S. housing market would begin to recover by now, but he remains optimistic about the nation’s economy.

In his annual letter to Berkshire Hathaway shareholders, Buffett said he is sure housing will recover eventually and help bring down the nation’s unemployment rate. But he did not predict when that will happen.

Investors eagerly await the letter from Buffett, 81, the so-called Oracle of Omaha, who built a roughly $44 billion fortune by following a steadfast, no-nonsense investing strategy.

Buffett said housing “remains in a depression of its own,” but he predicted, in typical plainspoken style, that the housing market will come back because some human factors can’t be denied forever.

“People may postpone hitching up during uncertain times, but eventually hormones take over,” he wrote. “And while ‘doubling-up’ may be the initial reaction of some during a recession, living with in-laws can quickly lose its allure.”

The housing prediction proved painful for Berkshire Hathaway. It owns more than 80 subsidiaries, including the Geico insurance company and See’s Candy, and five of them rely heavily on construction activity.

Those businesses, which include Acme Brick, Clayton Homes and Shaw carpet, generated pre-tax profits of $513 million last year. That’s well off the $1.8 billion those companies added to Berkshire in 2006.

Berkshire’s insurance companies took $1.7 billion in catastrophe losses last year, including from the earthquake and tsunami in Japan. Berkshire reported only $154 million in underwriting profit, down from $1.3 billion the previous year.

But several of Berkshire’s larger non-insurance businesses — Burlington Northern Santa Fe railroad, MidAmerican Energy, Marmon Group, Lubrizol and Iscar — all generated record earnings in 2011.

That helped Berkshire as a whole to generate $10.3 billion in net income, or $6,215 per Class A share, last year, down from nearly $13 billion, or $7,928 per share, in 2010.

A Class A share of Berkshire stock, which has never been split by the company, traded for $120,000 on Friday. Its more affordable Class B shares traded for about $80.

Buffett reassured Berkshire shareholders that the company has someone in mind to replace him eventually, but did not name the successor. He emphasized that he has no plans to leave.

Glenn Tongue, a managing partner at T2Partners investment firm, said he was struck by the fact that Buffett chose to deal with the succession topic as one of the first items in his letter.

“I think this was a forceful and stronger attempt to put this issue to bed,” Tongue said.

Buffett offered a couple of details about Berkshire’s succession planning in this year’s letter. Investors have long worried about who will replace Buffett as Berkshire chairman and CEO.

Buffett said the Berkshire board is enthusiastic about the executive it has picked and said there are two good back-up candidates.

“When a transfer of responsibility is required, it will be seamless, and Berkshire’s prospects will remain bright,” Buffett said.

Previously, Buffett had said only that the board had three internal candidates for the CEO job. Berkshire plans to split Buffett’s jobs into three parts to replace him with a CEO, a chairman and several investment managers.

Even though the successor wasn’t named, stockbroker and author Andy Kilpatrick said the way Buffett described the person makes him more confident that the leading candidate is Ajit Jain, who runs Berkshire’s reinsurance division.

“The more I think about it, the more I think we have a successor,” said Kilpatrick, who wrote “Of Permanent Value: The Story of Warren Buffett.”

Besides Jain, the other Berkshire managers believed to be possible successors as CEO are Greg Abel, president and CEO of MidAmerican; Tony Nicely, chief executive of Geico; and Burlington Northern Santa Fe CEO Matt Rose.

Berkshire has also cleared up some succession questions over the past two years by hiring two hedge fund managers, Todd Combs and Ted Weschler. Buffett said those two have the “brains, judgment and character” to manage Berkshire’s entire portfolio eventually.

Buffett said Combs built a $1.75 billion portfolio last year and Weschler is in the process of doing the same.

Buffett said he spent $67 million last fall buying back Berkshire stock for the first time since taking over the firm in 1965 because he believed it was undervalued. He said he regrets buying out shareholders at prices less than what the stock is worth.

Buffett has authorization to buy back stock anytime it is selling for less than 110 percent of its book value.
Dietzgen History

February 26, 2012

Eugene Dietzgen

From Wikipedia, the free encyclopedia

Eugene Dietzgen (1862-1929) was the first son of socialist philosopher Joseph Dietzgen, born in Germany.

EARLY LIFE

At age two he was taken with his father to Tsarist Russia to educate himself in Russian as well as learn his father’s business of tannery. They both returned in 1868.

In 1881, Eugene’s father Joseph sent him to America in order to escape the draft of the Kaiser as well as to hide some of his father’s socialist literature. Eugene had to safeguard his father’s literature because it had already landed Joseph in jail a few years before. Eugene was only 19 years old when he arrived in New York City. He started to work for a German drafting company, but eventually moved to Chicago and started the Eugene Dietzgen Drafting Company, which is still in operation today under different management.

At the time Eugene was heavily influenced by his father, one of Karl Marx‘s favorite philosophers on socialist theory. As a result, Eugene was very working-class conscious and provided his factory workers with many amenities not found in the mid 19th century. Some of these amenities include separate bathrooms for men and women, open windowsills with flowers decorating the air, and a general atmosphere of a healthy working community.[1] The original building still stands at 218 23rd Street, Chicago.[2]

HISTORY OF THE DIETZEN COMPANY (FROM NASHUA Company web-site):

–1885 –  German immigrant Eugene Dietzgen founds his own engineering supply house as both a dealership and manufacturers’ representative in Chicago, Illinois.

–1893 –  First manufacturing facility opened producing T-squares, drawing boards,  surveying instruments and other engineering supplies that are now highly valued by collectors for their craftsmanship and quality.

–1906 –  Second manufacturing facility opened at Fullerton and Sheffield Sts. In Chicago.  This plant was continually expanded until sold in 1976. It is now a historical landmark.

–1920 –  Dietzgen becomes the exclusive U.S. marketer of German dry “diazo”  positive-reproduction white printer papers.

–1959 –  Dietzgen becomes first company to market commercially viable polyester drafting films.

–1974-1976 –  Regional coating plants are combined with distribution centers to better service primary marketing regions at competitive cost.

–1986 –  Large document copier media – Dietzgen’s first digital printing products – is introduced.

–1995– In its 110th anniversary year, Dietzgen announced the acquisition of the  Klingler company. The newly consolidated corporation enhances both firms’ contributions to the marketplace by providing new technologies, new products and new services  to the reprographics industry.

–2002 –  Nashua Corporation purchases Dietzgen assets and integrates them with its own growing digital imaging business. Retaining the Dietzgen name, this new division brings a new customer focus and paper converting expertise to the business.

–2004 –  Nashua acquires the Magellan line of media to position Dietzgen as a full-service  provider to the growing large-format graphics market.

–2005-2006 –  Dietzgen opens new facilities in Jefferson City, TN and Cranberry, NJ, while upgrading  its current plant in Los Angeles, CA, to provide better service to a customer base that has grown to more than 1,500 dealers and service bureaus.

MORE RECENTLY….

I think this is accurate … Cenveo acquired Nashua and, with that, acquired Dietzgen. And, as we now know, Precision Paper acquired from Cenveo what’s left of Dietzgen.

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