Wednesday, July 28, 2010

Estimates for ARC (NYSE: ARP) for Q2 2010 - UPDATE TO PREVIOUS POST!!!

On July 25th, I did a fairly long-winded post about estimates for ARC for Q2 2010.

Now, I'm going to update the 'analyst estimates' that were in that post. In the July 25th post, I cautioned you that analysts do, on occasion, update their previously-issued estimates.

I've already mentioned to you that I'm a subscriber to Morningstar Research (a huge company, but one that no longer follows or reports on ARC), and that I'm also a subscriber to PAA Research (PAA is smaller than Morningstar, but PAA does research and report on ARC, and word has it that some of the financial industry's largest hedge fund operators are subscribers to PAA's research. I don't think I was supposed to mention that, but, oh well, I just did.)

Within the past week, PAA Research conducted and completed a survey of reprographers. The survey that PAA Research did should not be confused with the survey that Baird & Co is doing in cooperation with the IRGA. I've seen both surveys - PAA's and Baird's - they are very different. I consider myself to be fairly knowledgeable about the reprographics business and industry - some say I am an expert (hmmmm) - all I've got to say is that PAA's survey includes the types of questions I would be asking if I were doing a survey - in other words, Mr. Safalow, a financial person, DOES "get" our industry. I certainly can't say that about a lot of other "finance" people who attempt to follow and report on the reprographics industry.

This paragraph appeared in my July 25th post:
Okay, now I’ll give you a roundup of the revenue and earnings estimates I’ve found for ARC for Q2 2010. Please note that I did my research for this post today, July 25th, and analysts frequently revise and update their estimates, so this roundup is “as of today.”

Now, read this:
One analyst who follows ARC, PAA Research, issued revised estimates for ARC (NYSE: ARP) on July 28th. I've updated the estimates that appear below for the revised PAA Research estimates:

Prior numbers, for reference purposes:

Revenue Q2 2009 (same quarter, last year): $131.05 (million)
EPS Q2 2009: $.14

Revenue Q1 2010 (previous quarter, this year): $112.2 (million)
EPS Q1 2010: $.02


On Finance:
Number of analysts: 3
High estimate: $117.45 (million)
Low estimate: $113.83 (million)
Average estimate: $115.76 (million)

As per article of April 8, 2010 - Estimate: $118.5 (million)
As per article on July 28, 2010 - Estimate revised to $123.5 (million)


Number of estimates: 2
High Estimate: $.09
Low Estimate: $.04
Mean Estimate: $.07

Number of estimates: 4
High Estimate: $.06
Low Estimate: $.04
Mean Estimate: $.05

On Finance:
Number of estimates: 3
High Estimate: $.06
Low Estimate: $.04
Average Estimate: $.05

As per article of April 8, 2010 - Estimate: $.10
As per article on July 28, 2010 - Estimate remains at $.10

- - - - - - - - -

Joel's estimates for ARC’s numbers for Q2 2010 remain at:
Revenues, $119.5 (million)
EPS: $.08

Sunday, July 25, 2010

Newest Larry Hunt Publication - "Wide Format Newsletter"

I recently came across a Press Release about the launch of Larry Hunt Publications' newest publication - the "Wide Format Newsletter".

I've been a fan of Larry Hunt's publications for many years, probably since around the time it was first founded. My first company became a member of NAQP back in the mid 1970's, and the NAQP was how I later learned of Larry Hunt's very first publication. Giant Food, the largest grocery store chain in the D.C. area (which is where I hail from), used to have a slogan, "our best customer is an educated consumer." Well, if you've been a subscriber to Larry Hunt's publications over the years, then, when you made your decisions to purchase equipment (a copier, digital printer, or a multifunction system), you were probably a lot more informed about pricing in the marketplace for the equipment you purchased, and your choice of equipment was probably influenced by what Larry Hunt said about different brands and models.

After I read the press release, I visited Larry Hunt's web-site to see what else I could find, and, at the very bottom of the first page, it shows (links to) a few other sites of interest:

* John Stewart (Industry Consultant)
* John Giles ("The Digital Guru")
* Dave Fellman (Industry Consultant)
* Print Owners

Okay, here's the press release about Larry Hunt's newest newsletter:

Larry Hunt Publications recently announced the launch of Larry Hunt’s Wide Format Newsletter, which joins Larry’s two current newsletters: High Speed Copy News and Color Copy News. Larry has been producing these two highly successful newsletters for almost twenty years. Based on the tremendous response to a recent wide-format survey, as well as increased reader interest in this topic, he noted that “we have decided to introduce a wide-format newsletter. We are convinced that there is a need for comprehensive coverage of wide format reproduction”.

This new publication will focus on trends and issues related to wide format reproduction. Extensive surveys will help users decide on equipment purchases, with an emphasis on negotiating for best deals with up to date equipment pricing. “The Wide Format Newsletter will help you tap into one of the fastest growing markets in the graphic arts”, noted Larry Hunt. “It will offer tips to better utilize existing equipment, and ways to make better profits in high margin ancillary services. In addition, it will provide all the price data, field reports, user surveys and other features you’ve come to expect from my publications”.

Larry added that “Dirck Holscher, a fellow quick printer and good friend, will be partnering with me to publish this new newsletter and work closely with me on the other newsletters. Dirck has been writing and speaking about printing technology and business topics for many years, and will provide his unique expertise to the newsletters”. The editors will continue to offer individual assistance to readers with evaluation of the best equipment choice at a fair price. Many readers say this is the most valuable part of their subscription. For more information about all three newsletters, you can visit

Estimates for ARC (NYSE: ARP) for Q2 2010

Okay, ARC will soon be releasing its Q2 2010 “actual” numbers (Revenues and EPS), and I know everyone is waiting, waiting, waiting ….. and anxious to see ARC’s results! (ARC will be releasing its numbers after market close on August 3rd.)

I just checked on, and the current Equity Rating for ARC (NYSE: ARP) is “Outperform” (in other words, a “buy” recommendation.) (That Equity Rating was as of July 16, 2010.)

ARC released its Q1 2010 numbers on May 4, 2010. On April 26, eight days before the Q1 2010 press release, ARC’s shares closed at $10.87.

Since then, the lowest price ARC’s shares have closed at was $8.12*, which was the closing price on July 15th. However, ARC’s shares have had an impressive surge the past 10 days; ARC shares closed at $9.13 on July 23rd.

Okay, so we are now about 8 days before ARC issues its Q2 2010 earnings release, and, as I just said, ARC’s shares closed at $9.13 on Friday.

I’m going to give you a “roundup” of the revenue and earnings estimates I’ve seen for ARC for Q2 2010. But, first, I’m going to make a few comments:

For Q1 2010, one analyst, Brad Safalow of PAA Research, LLC ( was “right on the mark” with his estimates of ARC’s Q1 2010 Sales and Earnings Per Share. While I would say that “his crystal ball must be working properly”, I am a subscriber to PAA, and, having read all of the reports PAA has issued about ARC, ever since PAA began following ARC, I am well aware that Mr. Safalow does an extensive amount of research about ARC and the Reprographics Industry (and the AEC Industry that most of ARC’s revenues are generated from), enough to know that “crystal ball” does not apply to Mr. Safalow. Quite frankly, I’ve read analyst research reports from other investment research companies – and I’m referring to very large companies – and I’ve yet to find another investment research company that has “as good a grip” as Mr. Safalow has on ARC and the Reprographics Industry. The depth of his research and analysis is very impressive!

Most reprographers are aware that (at least) two different companies – Robert W. Baird & Co and PAA Research, LLC - are periodically conducting “surveys” on the AEC Reprographics Industry. Apparently, Baird’s survey is limited to reprographers who are members of the IRGA. It is my understanding that PAA Research’s survey is not limited to IRGA members. Without question, those surveys are being conducted so that these two firms, who both report on ARC and who from time to time issue recommendations about ARC stock, can make informed estimates and comments.

Okay, now I’ll give you a roundup of the revenue and earnings estimates I’ve found for ARC for Q2 2010. Please note that I did my research for this post today, July 25th, and analysts frequently revise and update their estimates, so this roundup is “as of today.”

Prior numbers, for reference purposes:

Revenue Q2 2009 (same quarter, last year): $131.05 (million)
EPS Q2 2009: $.14

Revenue Q1 2010 (previous quarter, this year): $112.2 (million)
EPS Q1 2010: $.02


On Finance:
Number of analysts: 3
High estimate: $117.45 (million)
Low estimate: $113.83 (million)
Average estimate: $115.76 (million)

On (as per article of April 8, 2010)
Estimate: $118.5 (million)


Number of estimates: 2
High Estimate: $.09
Low Estimate: $.04
Mean Estimate: $.07

Number of estimates: 4
High Estimate: $.06
Low Estimate: $.04
Mean Estimate: $.05

On Finance:
Number of estimates: 3
High Estimate: $.06
Low Estimate: $.04
Average Estimate: $.05

On (as per article of April 8, 2010)
Estimate: $.10
(Note: I am not aware that PAA has updated its estimate since April 8)

- - - - - - - - - - - - - -

Joel’s further comments:

As I’ve pointed out in previous posts, I have a crystal ball, somewhere, but it does not work. And, as I’ve also previously pointed out, I did not graduate from Stanford, Harvard, Wharton or Columbia. In addition, I’ve never worked for a finance or investment company, nor for a mutual fund or a hedge fund. (The only hedge I’m very knowledgeable about it is the one in front of my house.)

But, putting all that aside, I’m now going to take a SWAG “stab” at ARC’s Q2 2010 numbers. (Definitely, SWAG method.)

Things my SWAG estimates consider:

1) Traditionally, the 2nd Quarter of each year is the strongest quarter of the year for reprographers. Even though ARC’s Q2 2009 revenues were less than its Q1 2009 revenues (and that was not normal, that was an anomaly), I’m guessing that there has been at least some “stabilization” this year in the reprographics market and that ARC’s Q2 2010 sales will exceed its Q1 2010 sales. (And, if we see that that happened, that will at least be refreshing, because it may mean a return to “normal” seasonality.)

2) By now, most of the Fed stimulus money is in the AEC marketplace, not sitting on the sidelines waiting to be committed. ARC should benefit at least somewhat because of that.

3) ARC indicated in past Press Releases that it was going to be pushing hard into the “non” AEC reprographics marketplace. ARC established a sub-brand, “RIOT COLOR” and has been pushing into the color imaging marketplace. By now, I’m guessing that ARC has experienced at least some growth in revenues due to its non-AEC reprographics initiatives.

4) ARC has interests in businesses in China and India. ARC’s market share (of the total reprographics market) in those two extremely large nations has to be very small, considering the very short period of time that ARC has established its interests in those two countries. Which gives ARC the opportunity to grow its revenues in two large countries with enormous populations and huge demand for housing, hospitals, schools, universities, retail, office buildings, infrastructure improvements, etc. I’m guessing that ARC’s revenues and EPS will benefit from its interests in China and India.

I don’t like to bet against Brad Safalow of PAA Research, for, as I said earlier, he hit the numbers “right on the money” last quarter. But.....

My estimates for ARC’s numbers for Q2 2010:
Revenues, $119.5 (million)
EPS: $.08

WilsonMiller acquired by Stantec

A visit to the web-site of the Tampa Bay Business Journal revealed news that Stantec is acquiring WilsonMiller (transaction is expect to close in July).

WilsonMiller is an engineering firm based in Naples, FL (with office locations in ten Florida cities), and, due to the fact that I visited WilsonMiller's Naples office, several times over the years when I was with NGI, I know at least bit about WilsonMiller. For one thing, the President & COO of WilsonMiller, Fermin Diaz, is one of the nicest, friendliest people you could ever hope to meet and chat with. And, WilsonMiller's CTO, Walter Johnson, is a very smart technology guru. (I'm guessing that Walter is still with WilsonMiller.)

Stantec, which I think is based in Canada (I'm not positive about that; when I went to visit Stantec's web-site this morning, I could not, for some unknown reason, get on it) is a much larger company than WilsonMiller. Stantec has around 9,500 employees in Canada and the U.S. (and possibly some overseas?) Stantec has been an acquisitive company over the years; one of those - Stantec purchased The Keith Companies in California back around 2005, and, at the time of acquisition, The Keith Companies employed approximately 800 team members. Stantec has purchased several other companies.

The WilsonMiller acquisition greatly increases Stantec's presence in the State of Florida. And, WilsonMiller is a highly respected engineering firm. Congrats to the WilsonMiller team.

Beyond that, one has to wonder why WilsonMiller decided to be acquired. Did the recession cause WilsonMiller to seek association with a much larger firm, one that has not been hurt by the depression-like conditions in the AEC sector in Florida? Stantec appears to have a very solid P&L and Balance Sheet.

There are already a number of national and international engineering firms doing business in Florida, including Parsons Brinkerhoff, CDM, HNTB, HDR, ARCADIS, AMECOM, MACTEC (and there are others.) WilsonMiller was only in business in Florida, so WilsonMiller is a very good fit for Stantec.

But, one also has to wonder if this deal (and deals like this one that have previously happened with Florida-based engineering firms) will influence some of Florida's other "independent" engineering firms (I am speaking about those who are based in Florida) to consider selling to, or merging with, very large firms like Stantec. Will PBSJ go that route, eventually? Will RS&H and King Engineering go that route, eventually?

Okay, here's the story that appeared in the Tampa Bay Business Journal (July 20th, 2010) about the Stantec/WilsonMiller deal:

WilsonMiller, which for more the 50 years has been involved in some of Florida’s most visible real estate projects, has agreed to be acquired by the Canadian design firm Stantec.

Company officials would not disclose the purchase price. The deal is expected to close on Friday. Stantec (NYSE: STN) has more than 150 North American offices including Tampa and Sarasota. The acquisition boosts the company’s Florida payroll from about 40 to more than 300 workers.

“We believe that WilsonMiller will be a catalyst for future growth of Stantec in Florida, which despite the current difficult economic climate, still remains one of the largest markets in the country,” Bob Gomes, president and chief executive officer, said in a release. “They bring a talented team that managed their company very well through the recession and is now well positioned to take advantage of opportunities in both the public and private sectors.”

The firm will be called WilsonMiller Stantec for the time being.

A company spokesman said there is no plan to layoff any of WilsonMiller’s 265 employees or close any of its 10 Florida offices, including Tampa and Sarasota.

WilsonMiller, based in Naples, has a portfolio of projects that includes the redevelopment of Tampa’s Channel District and the Ave Maria town and university development in Collier County east of Naples.

“Throughout our history, we have proactively adapted to meet the changing needs of our clients and communities,” Alan Reynolds, chairman and CEO of WilsonMiller, said in the release. “Joining with Stantec is the next step for us to take to become part of an international network that gives our clients access to a much wider range of services and expertise as well as provides our employees with better technical resources and more opportunities to grow their careers.”

Reynolds will stay with the new company in an as yet undisclosed “leadership role,” Stantec spokesman Jay Averill said.

Stantec has done primarily geo-technical and environmental work since coming to Florida in 2006. Averill said the acquisition of Wilson Miller will help the company expand its reach in the fields of transportation, urban land development, and engineering and design work for commercial and industrial buildings.

Stantec acquired Industry and Energy Associates LLC (NYSE: IEA), a 60-person engineering company headquartered in Portland, Maine, earlier this month. Averill would not disclose whether the company is eyeing other Florida firms.

Recent "Construction Spending Report" on Associated Builders & Contractors web-site

There was a very interesting article posted on July 1, 2010 on ABC's (Associated Builders and Contractors) web-site. That article talks about "construction spending".

You can access the full article at this Internet address:

For me, the most interesting part of the article was the "analysis" part. That analysis was provided by Anirban Basu, ABC's "Chief Economist."

Below, you'll find Mr. Basu's analysis. (I've taken the liberty of "bolding" some of his comments, simply so they will stand out.)


“One could view today's release as positive news,” said Associated Builders and Contractors (ABC) Chief Economist Anirban Basu. “The level of construction spending in May hardly changed from the prior month, and April represented an improvement over March. However, for the most part, today's report should be viewed as further indication that the U.S. economic recovery continues to stall.

“Construction spending growth, to the extent that it exists, continues to be the domain of publicly-financed projects, particularly those attached to the stimulus package passed in February 2009,” said Basu. “This is clearly apparent in the list of subsectors that continue to register year-over-year growth, such as conservation and development, transportation and highway/street.

“If the increase in construction spending was motivated by privately-financed activities, there would be a basis upon which to rejoice since that would be an indication that the private portion of the construction economy is gaining traction,” Basu said. “Privately-motivated growth can be sustained indefinitely, at least theoretically. On the other hand, publicly financed growth associated with deficit spending cannot last into perpetuity, not even theoretically.

“Unfortunately, steep year-over-year declines continue to be apparent in privately-financed, developer-driven activities, most notably in construction spending related to lodging, which has declined 62.1 percent over the past twelve months,” said Basu.

“The bottom line is that the impact of the stimulus will eventually run out. When that happens, privately financed activities will need to be expanding merely to hold construction spending level in the U.S. In the absence of private momentum, the near-term remains largely positive for segments directly impacted by stimulus dollars and largely negative for those that are not,” Basu said.

Current Construction Industry Conditions In the U.K. - - are apparently about the same as they are in the U.S.

There is a very well-written article about current conditions in the U.K. Construction Industry.

The title of that article:
The tracker: Back to Reality (article is dated 16 July 2010)

The sub-heading under the title of the article:
Hopes that increased activity at the start of the year would continue into the summer were dashed as the activity index fell to a six-month low

And, you can read the full article (which has some nice charts and graphs) at this internet address:

AIA ABI Index for June 2010 - Very slight increase from May, but still under 50!

I still don't see the June ABI Index report on the AIA's web-site, but, after Googling a bit, I found an article on the Denver Business Journal's web-site that spoke about the June 2010 AIA ABI Index ......

From the Denver Business Journal:
Demand for architectural design services nationwide continued to decline in June — with the western states, including Colorado, reporting the lowest demand by region — according to an American Institute of Architects report Wednesday.

Nationwide, the AIA’s Architectural Billing Index, or ABI, was 46 last month, up slightly from 45.8 in May and an increase from 37.7 in June of ’09.

In the West, the ABI inched up to 43.6 last month from 42.9 in May, and rose from 39.9 for the prior-year June. The ABI is a leading economic indicator of construction activity, showing the nine- to 12-month lag between when architecture firms bill clients and when money is spent on a construction project. A score above 50 represents an increase in billings.

The ABI blames drops in commercial real estate values for the lack of new construction. “The steep decline in nonresidential property values has slowed investment in new facilities,” AIA Chief Economist Kermit Baker said in a statement. “Conditions at architecture firms remain very soft, but we’re optimistic that they will improve before the end of the year.”

While less commercial construction is tough on the architectural and construction industries, it can be good for the absorption of vacant space in existing industrial, office and retail buildings, according to real estate brokers. It also keeps rental rates relatively strong.

For June, the northeastern part of the country had the highest ABI by region at 47.7, up from 42.8 for the same month last year but down from 50.6 in May. The South’s score last month was 46.7, up from 40.5 year over year and up from 45.9 the previous month. The Midwest’s June ABI was 46.3, up from 36.2 year over year but down from 48.5 in May.

The ABI is calculated from monthly surveys sent to AIA members, asking whether their billings increased, decreased or stayed the same from one month to the next. The score is created based on the proportion of respondents choosing each option.

- - - - - - - - - - - -

Joel's comment:

Just to repeat, Kermit Baker (of the AIA) said, “Conditions at architecture firms remain very soft, but we’re optimistic that they will improve before the end of the year.”

Kermit Baker is an optimist! But, remember, there's "power in positive thinking"! Let's HOPE that Kermit is right!

Friday, July 23, 2010

Cat and 3M Earnings Put Worries of Double-Dip to Rest - (WHAT!!!)

I'm a subscriber to Morningstar Research. Morningstar provides investment advice and does an extensive amount of research about public companies, ETF's, Mutual Funds, Bond Funds, etc, etc. Inasmuch as Morningstar's success is tied to the success of investors who invest in the market (rather than squirreling away their funds in a pillow or under the mattress), I think that it is reasonable to assume (even though I hate to assume anything) that Morningstar has a bias towards "positive" news rather than negative news. [Some of you may have heard the phrase "the power of positive thinking." (That phrase comes from the title of a book by author Norman Vincent Peale, and that book is an all-time-international-inspirational-best-seller.)] And, yes, I do agree that "positive thinking" is very important. Look at it this way, if you are the leader of a company and you have positive thoughts, a positive "we can do this" attitude (in spite of a negative environment!), then there is a chance that your company may actually do it, grow and succeed. But, if you are the leader of a company and you have a negative attitude, there is little chance that your company will grow and succeed, for negative thoughts become infectious throughout one's company, meaning, your team members will think negatively too!

Some of my blog-posts may cause you to think that I'm a pessimist. But, the opposite is actually the case; I'm the eternal optimist. That does not mean that I don't think that things (let's say the subject is the economy in the AEC industry) are always rosy and wonderful - because, in fact, nothing is rosy or wonderful "always", the AEC industry and the AEC reprographics industry experience ups and downs (and that's an "always") - it means that even when I don't think things are rosy and wonderful, there is still the opportunity to push forward, survive, grow again, succeed! Like I said, if you "don't think you can do it", you probably won't! And, if you do think "you can do it", you certainly have a better chance of getting it done than you would if you think you can't!

I have no idea why I got off on that tangent, so let me get back to talking about what I intended to talk about when I sat my butt down to write this blog-post.

The other day, I saw an article posted on Morningstar, an article that was a very upbeat article. It appeared in Morningstar's "Morning Digest" and the title of the article was, "Cat and 3M Earnings Put Worries of Double-Dip to Rest". Morningstar's Adam Fleck (the Morningstar team member who authored that article) thinks the strength of industrial earnings this quarter have put to rest fears of an imminent economic downturn.

I would be willing to be anyone that Morningstar's revenues and profits are greater during periods when demand for stocks, bonds, ETF's, Mutual funds, blah blah, etc. is strong and that the opposite is also the case. Demand (appetite "to buy") is what drives up the prices of stocks ... and, when stock prices go up, the market averages go up. When there is that sort of climate in the market, investors want to make even more informed decisions for their portfolios, and that's where Morningstar fits it (subscriptions to Morningstar.) So, when I read an article from a Morningstar team member, I always try to remind myself that it is in Morningstar's best interests for its team members to write positive, rather than negative, articles.

Recently, I did a post (on July 11th) that mentioned Dr. Hussman. Dr. Hussman said, in a very recent article posted on his company's web-site, that "his signs" say that we are going to enter a double-dip, quite soon. On July 15th, I received an e-mail from one of my reprographics industry friends (he is the President of one of the industry's larger companies), and, in his e-mail, he said:

"Hi, Joel, I hope all is well. I saw you posted some comments by John Hussman. Let me tell you, I have been following Hussman for years, and as far as I am concerned, he is one of the top economists, and possibly the best, in the U.S. As an economics major at _____, and a finance major at _____, I know something about economics. But more importantly – and it’s the only thing that counts, actually – he has simply been correct on every prediction, whereas almost everyone else has been wrong. He nailed the recession in 2000. He nailed the one in 2008. He nailed the associated bubbles too. Put your money on this guy, and forget about what you read from 99% of the other guys in the media."

Now, you might be thinking that my friend who said this is a pessimist for thinking that Dr. Hussman's prediction of a double-dip is likely right on. But, the friend who said this is the leader of a company that continues to be very aggressive in the industry, in spite of the downturn the economy experienced! That is the mark of an optimist, and optimism is infectious as well. While he maintains an "eye on" what might prove to be more stormy weather, he is positioning his company to continue its success.

Anyway, back to Dr. Hussman and the Morningstar article I mentioned, on the one hand, Dr. Hussman says that we are headed into a double-dip, and, on the other hand, the author of the Morningstar says (or at least implies) that, because Catepillar and 3M had positive news, "the strength of industrial earnings this quarter have put to rest fears of an imminent economic downturn". Well, certainly two completely opposite points of view!

Which guess is correct, double-dip?, no double-dip? How the hell should I know; I've told you before, I'm not all that smart. And, I don't have a crystal ball. (Actually, now that I think about it, I do have a small crystal ball somewhere, but it must be defective because I never got it to work!)

And, on the subject of crystal balls, I'm now old enough to realize that the substantial majority of those who hold themselves out to be experts in investments, finance and economics and who get paid to make predictions and give advice - whether it be predictions about sales and earnings, or predictions about future stock prices ("target prices", is what I'm speaking of), or predictions about the direction of the economy, or, closer to home, predictions of "recovery" in the residential construction market, or predictions of "recovery" in the non-residential market - don't know their ass from left base! They get paid to GUESS! (Damn, I'd like to have a high paying job where I get paid to guess!)

Case in point. There was a time when some analysts (and financial-investment researchers) who follow ARC said that "ARC only gets 15% of its business from residential construction", therefore implying that non-residential would continue to be okay and ARC's sales and profits would not be hurt too badly. Hmmm. As Lewis Black might say, "well, that guy didn't know ___t!) How about a "buy recommendation" when the stock price was in the mid 20's? (and quickly moved down from that point.)

The point is, is there really "anyone out there" that really knows "what's going to happen .... and when it's going to happen"?

I don't know about the rest of you, but I've yet to find the guy (or gal) who has a working crystal ball.

But, beyond that, one must maintain a "positive thinking" attitude .... and maintain that whether times are great or tough or terrible. That, to me, is the key to being successful in business.

Sorry for the long-winded post, but when I read the title of the Morningstar article that said this, "Cat and 3M Earnings Put Worries of Double-Dip to Rest", it made me smile and laugh out loud, and I just had to share my glee with you!

FMI’s Construction Outlook: Second Quarter 2010

Here's the latest news about the Construction Industry in an article from an outfit called "FMI". On of my blog readers was very kind to bring this article to my attention.

FMI provides "management consulting" and "investment banking" services to the Construction Industry.

I have yet to read through the entire article, so no comments for now.

The full article and the report can be found at this internet address:

FMI’s Construction Outlook: Second Quarter 2010 Report Now Available
July 1, 2010, by Sarah Vizard

Here's the internet address for the article:

Here are some excerpts from the article:

"While there have been positive signs for the general economy, unfortunately, the outlook for put in place construction for 2010 remains bleak. Total construction in 2010 will be down 5% after declining in 2009. Residential construction is expected to begin recovering in 2010. Nonresidential construction will decline 16% in 2010. Nonbuilding construction will continue to be a positive contributor thanks to the support of power and conservation and development construction.

The construction industry should prepare for another year of decline in nonresidential construction. Construction lost 35,000 more jobs in May. There have been losses in 31 out of 33 consecutive months, bringing the construction unemployment rate to 20.1%, compared to 27.1% in the first quarter. An increase in residential construction in 2010 could begin to turn the employment situation, but it is unlikely that it would do much to offset the losses from nonresidential construction."

Thursday, July 22, 2010

OCE Q1 2010 Financial Results (and, will we see OCE's numbers in the future?)

Sorry, I forgot to mention this when I should have, like a couple of months ago.

OCE's Q1 2010 Financial Results can be found by going to this Internet address:

It's always interesting to read about the AEC Reprographics Industy's largest vendor and to see how that vendor is doing. If you are in the reprographics business, you should spend a few minutes time to read OCE's Q1 2010 report.

Also, since Canon has acquired OCE, this may be the last time OCE has to report on its own. Or, maybe not. I have no idea about the public reporting obligations/requirements of a Japan-based company that owns a Netherlands-based company, or about the reporting obligations/requirements of a Netherlands-based company that's owned by a Japan-based company.

If Kinko's had been a publicly-held company before Fedex acquired it, we would have been able to read about Kinko's financial performance in 10Q's and 10K's. But, even if that had been the case, Kinko's, after the acquisition by Fedex, would no longer have had to report its numbers. And, today, Kinko's (Fedex Office's) performance numbers are "buried" in one of Fedex's operating segments. So, we can't see how Kinko's (Fedex Office) is performing. I think that's going to happen to OCE's numbers, but I'm not positive about that.

"Bernanke Says Extending Tax Cuts Maintains Stimulus" - - Hmmm?

Above, the title of an article on Bloomberg News, today.

Below, a few excerpts from that article:

July 22 (Bloomberg) --
Federal Reserve Chairman Ben S. Bernanke said extending the tax cuts passed during former President George W. Bush’s administration would help strengthen a U.S. economy still in need of stimulus.

“In the short term I would believe that we ought to maintain a reasonable degree of fiscal support, stimulus for the economy,” Bernanke said today in testimony before the House Financial Services Committee. “There are many ways to do that. This is one way.” (Blog-editor's note: When he said, "this is one way," he was referring to an extension of the tax cuts, which, by law, are supposed to expire by the end of 2010.)

Bernanke, in the second day of semiannual congressional testimony on monetary policy, said the central bank will act to spur growth should the economy sputter. A top lieutenant, New York Fed President William Dudley, said today that the “road to recovery is turning out to be a bit bumpy.” (Blog-editor's note: As to the comment the NY Fed President made, "bumpy", all I have to say is "no shit, Shurlock" and "how about telling us something we don't already know.")

Three Options
The Fed chief reiterated three central bank options for further steps, including giving more information on the Fed’s commitment to low interest rates, reducing the rate paid on banks’ reserves held at the Fed and buying more securities.

- - - - - - - - -

Joel's comments:

Beyond the Federal Government's stimulus spending, Fed policy, with the tacit approval of both the Executive and Congressional Branches of the U.S. Government, was to make our financial/banking system healthy again by substantially reducing the interest rates that Banks pay for money Banks borrow from the Fed. [I'm intentionally not mentioning the Government's decision, with tacit approval from Congress, to cure the ills of companies in the financial community by buying their toxic assets and by (for all intents and purposes) insuring / guaranteeing their garbage loans (such as is the case with Freddie Mac and Fanny Mae). Well, there we go, I did mention that, anyway.]

And, yes, the Banks are getting healthy; their cost-of-money is way down and they are earning money because of that. On the other hand, this (the very low Fed borrowing rate) was supposed to reduce the interest costs of businesses and consumers. Well, that's presuming you can actually get a loan! While it is true that mortgage rates are at an all time low, qualifying for a mortgage is much more difficult now (than it previously was), and who the hell is buying homes anyway! People who don't have jobs? People who are still fearful that they might lose their jobs? And, while interest rates on mortgage loans are at an all-time-low, what the hell happened to interest rates Banks charge on credit cards! Banks rushed to raise credit card interest rates, even though their interest costs dropped! I call that, "let's screw the consumer!" And, "while we're at it, let's cancel credit cards and make it more difficult to get them." I don't see where Banks are "sharing the wealth" with consumers! And, since our economy's recovery needs consumer spending to increase, why aren't our "leaders" forcing that (Banks to lower interest rates on credit cards) to happen?!

Our "seniors" aren't going to be "spending" anytime soon. Income on their investments is at an all-time-low. (I'm lucky if I can find a 1 year CD that pays much of anything! Same for MM accounts!) Seniors can't afford to "spend." Unemployed people aren't going to be spending anytime soon! The government will extend their unemployment benefits, but where's the government (and Congress) when it comes to really stimulating JOB GROWTH!

Wow, "ain't" you glad your bank is earning big money again?! ... while you are earning far less on your CD's and MM's?! If your banks shared some of their earnings (by increasing the interest they pay you on CD's and MM accounts), you'd have more money to spend ... and then you'd be able to help stimulate the economy! (My wife has been trying to do that all on her own, much to my chagrin! Hey, I need some relief!)

As to extending the tax cuts, I'd prefer to see that NOT happen. Unemployed people pay little, if no, tax anyway. Extending the tax cuts won't help them. Big corporations are stowing cash. Extending tax cuts doesn't necessarily mean that they will invest that money in their companies; it could very likely be that all that will happen is that they will add to the cash they are hoarding. Middle income taxpayers will see little relief; they are still unsure about their jobs, wages are not growing, compensation in many industries got cut back. So, who really benefits from the tax cuts anyway? Very wealthy people. I'm not against very wealthy people. And, I'm not into Socialism. However, I'm also not into our Government continuing to give handouts to people and entities that should not be continuing to get handouts, and, here, I'm speaking about Banks and companies in the Financial community.

How about:
Job Tax Credits?
Investment Tax Credits?

If we're going to give tax cuts (which is, effectively, what a tax-credit does, it cuts taxes on income), then let's do that by "encouraging" companies to hire people and buy equipment.

Lyra White Paper Showcases How Color Printing Can Yield Construction Project Savings

This article comes from .....

Lyra White Paper Showcases How Color Printing Can Yield Construction Project Savings
Posted: July 19th, 2010 01:04 PM EDT
Lyra Research

Since the 1960s, the productivity growth rate for the construction and building industry has averaged -0.59 percent, while all other industries combined have an average productivity growth rate of 1.77 percent. General construction industry estimates claim that between 10 and 30 percent of all building project costs can be attributed to wasted activities, such as schedule overruns, wasted labor and management time, wasted materials, and unnecessary litigation. Based on US Department of Commerce building estimates for 2009, a 10 percent waste factor is equal to approximately $94 billion. Without indicating the specific cause, this information reveals that significant opportunities for waste reduction and productivity improvement exist in the construction industry, if the problem can be effectively defined and viable solutions identified.

Lyra Research has published a white paper, Color Construction Documents: A Simple Way to Reduce Costs, which discusses the forces that have created unnecessary costs and waste in the construction industry. Sponsored by Océ North America, this white paper examines how advanced technologies, in particular color computer-aided design (CAD) printing, deliver significant cost-reduction opportunities and greater productivity and profit for traditional design-bid-build projects. The paper also details the specific benefits of applying color construction documents to design-bid-build projects for project owners, general contractors, and architecture, engineering, and construction (AEC) firms, including how each incremental dollar invested in color printing can yield $4 in savings for a construction project.

Furthermore, the paper offers a simple model for quantifying the operating (RFI and change-order management) and project cost waste factors (estimation cost contingencies and net value of change orders) caused by poor documentation. It also delivers a four-step flexible ROI model, with a sample project, to measure the anticipated cost savings and overall return that can be gained by leveraging the use of color construction documents. The four-step ROI model involves estimating the waste in project costs; estimating the reduction in waste for operating expenses for general contractors; estimating the reduction in waste costs for project owners; and inputting color CAD printing costs.

"This white paper showcases Lyra's research, knowledge, and analysis of the printing industry," said Frank Stefansson, CEO and executive vice president of Lyra Research. "Our consultants were able to synthesize information to create a model focused on improving the specific business processes used in the AEC and technical CAD markets, ultimately saving companies time and money by improving ROI and increasing productivity. This type of analysis can be applied to other industries and vertical markets that utilize imaging technologies."

To download a free copy of Color Construction Documents: A Simple Way to Reduce Costs, please visit Lyra Consulting Group. For more information, contact Joel Mazza, director of business development, at 617-454-2664 or

Monday, July 19, 2010

"Homebuilders losing confidence in the recovery"

Reference the above "title", an article was posted 45 minutes ago on "Google hosted news", and the author of that article really had nothing but "bad news" to report. Evidently, the NAHB (National Association of Home Builders) today published its monthly reading of "builders' sentiment" and, my take on the index readings .... well, they are "off the charts" on the negative sentiment side.

The author states in the article, "Readings below 50 indicate negative sentiment about the market." Well, at some schools, if you score a 50, you flunk the course. Imagine scoring a 21, a 15 or, egads, a 10!

I don't mean to be the bearer of "bad news." But, there's not much "good news" to write about. When I find a glimmer of good news, I make it a point to talk about it on this blog-site.

If you're a reprographer, then it is always in your best interests, whether good news or bad news, to keep up to date about what's going on. If we are leading into a recovery, you have to make plans to grow with the recovery. Or, to the opposite, if the economy is headed down, you need to make necessary adjustments to the budget.

You can read the full article at this internet address:

It will take most less than 7 or 8 minutes to read the entire article. Get to it, do your homework!

Sunday, July 18, 2010

Recent article on PEiR Group blog-site: Sell Software to Grow Sales and Profits

Check out the latest article Shaun Meany, President of the PEiR Group, posted on the PG blog-site. That article is located at this Internet address:

What you see below is not the full text of the article. The article includes some scary stuff, and I thought it would be interesting to highlight the scary stuff. Scary stuff always provokes food for thought.

Sentences from the article include:

"As the economy continues to linger in the doldrums many reprographers are struggling to make ends meet."

"For some reprographers, revenues are down as much as 50 percent from the industry highs of 2008 and profitability, of any amount, is becoming difficult to realize."

"What('s) more, Reprographers are struggling to develop strategies to survive."

"Demand for traditional printing and other services are down as your clients continue to adopt digital workflows to save costs and improve productivity."

"As business leaders, it is extremely important that you strategize on ways that you can re-position your company’s message and resources so you will be prepared to offer the right products and services that your marketplace with need after it experiences the paradigm shift that will result."

"The profiles of the companies that survive the recession will likely be smaller but more efficient."

C2 Reprographics (California) appears to be shaking it up in the Southland

When I first met Gary Crisp, CEO of C2 Reprographics, C2 had one location, which was in Costa Mesa, CA. Prior to founding C2, (with his wife and partner, Julie Crisp) Gary had no experience in the AEC reprographics business or industry. (He did have experience in the "small-format" imaging industry.)

I've met Gary a couple of time over the years, and I've met Julie at least once (I think that was at a PEiR Group FM Sales Seminar); sharp people. At the time I first met Gary, Greg Lundeen, ex-CEO of Consolidated Reprographics was a member of the C2 Board, and one could not have a better industry advisor than Greg Lundeen.

A recent check on C2's web-site shows that C2 Repro now operates 6 locations and provides services in 3 different Southland markets: Los Angeles, Orange County and San Diego (the latter through an acquisition.) Head-to-head players in those three market areas include ARC, ABC and C2. Cybercopy, a ReproMax member is a large player in the L.A. market.

Above, I mentioned that Gary and Julie are sharp people. Well, sharp people surround themselves with other sharp people. A quick look at C2's team web-page reveals at least 3 C2 management team members who had previous experience with competitors:

Barry Malkin, Senior Vice President Marketing & Strategy. A Cal Poly Pomona alumnus with a B.S. degree in Business and Marketing, Barry’s entrepreneurial experience as a flooring subcontractor, experience in sales and operations management with FedEx Kinko’s provide key leadership in C2’s strategy, service, pricing, and new products.

Keath Lauderdale, Senior Vice President of On-Site Services; Keath began his career in reprographics 1978 in his father’s business United Reprographics. At United, he originated the west coast’s first on-site services program. After United was acquired by Consolidated Reprographics in 1994, Keath joined its senior management team and later pioneered Professional Reprographics who then sold to its employees.

Kristine Mattson, Controller. With over 25 years experience with equity investments, acquisitions, and financial reporting, Kristine worked with Prudential Financial, PRIMEDIA Publishing, and prior to joining C2 in April of 2010, was Assistant Controller for Consolidated Reprographics. Kristine is currently working on her Business Administration degree at the University of Phoenix, and is due to Graduate in November 2011.

(One comment: Consolidated Reprographics was acquired by ARC several years ago.)

Stunning Announcement! - ABC Imaging captures PBSJ's reprographics business!



ABC Imaging and PBSJ agree to FM print services deal
Washington, DC—July 16, 2010—ABC Imaging announced today it will provide on-site print services for PBSJ, a leading infrastructure engineering and architecture firm.

PBSJ operates more than 80 offices in the U.S. The Florida-based company has considerable expertise in a wide variety of engineering and architectural services in both the public and private sectors. PBSJ's projects have included everything from theme parks to toll booths and its services range from hazardous waste management to structural engineering for bridges.

"Our agreement with PBSJ represents ABC Imaging's commitment to the AEC industry," said Medi Falsafi, President, and CEO of ABC Imaging. "With the PBSJ account, we add to our position as a leader in enterprise-wide facilities management programs."

According to Don Vrana, PBSJ's Chief Financial Officer, "This is a new step for the corporation, and a departure from our traditional operations. However," Vrana said, "we are confident that our arrangement with ABC will provide new efficiencies and cost savings to the company that we expect will have a positive impact on our bottom line for the long term."

ABC Imaging will begin installing printers and other hardware in the early summer. Of the more than 80 locations, 19 will be manned locations with at least one ABC Imaging employee assigned to the client site.

End of Press Release.

- - - - - - - - - - -

Joel's comments:

Long ago (back in the 1980'), after we had accomplished selling our first 6 or 7 staffed FM (OnSite) deals at our first company (Rowley-Scher), I remember making a remark to one of my reprographics industry friends about selling FM programs, .... "the more you have, the more you get." Meaning, the more programs you have, the higher your credibility at providing that service, and increased credibility leads to additional sales of that service. In the mid 1980's, we took one of ABC's largest accounts away. That account was HOK's Washington, DC office. Prior to that, ABC was providing reprographics services to HOK's DC office, but not in an FM environment. Bob Abrams (our DC Sales guy at the time) and I had a one hour meeting with the four principals who were then managing HOK DC's office - we were there to "pitch" our FM concept and program (and, at that time, all of our FM's were staffed FM's.) At the end of the hour meeting, we responded to about 30 minutes (or so) of questions; the very first question they asked, "who are you already doing this for?" We verbally listed the A/E firms we were already providing FM services to, and you could, literally, see the balls (meaning, their eyes) rolling - it was, for us and for them, an issue of credibility - and we had that, credibility, in the bag. We implemented the HOK DC FM service and it lasted (remained with my ex-company) for at least a dozen years, if not longer. (The HOK DC FM went to NRI at that time.)

While I certainly don't know how many separate FM deals ABC Imaging has country-wide, ABC has, in the past, issued press releases that reveal a few of its "national" FM deals, including its deals with HNTB, Parsons Brinckerhoff, and Perkins & Will. And, now PBSJ. What is VERY INTERESTING to me is that, five or six years ago, ABC wasn't doing much business "to speak of" in Florida, and the deal that they just announced is with a major FLORIDA-BASED firm. And, PBSJ is not just a major Florida-based firm, PBSJ is an "old-line" very traditional firm. I joined NGI (which is a Florida-based reprographer now owned by ARC) in late 1997. Shortly after that, our CEO (Martha Korman) introduced me to several of PBSJ's top people. And, for me (and for our CEO), that began an extended "off and on" pursuit of PBSJ (to convince them that they should go the FM/OnSite route), a pursuit that lasted my entire 10 year career at NGI! An UNSUCCESSFUL pursuit at that! During that ten year period, I (we) met a number of PBSJ's officers and top managers, including PBSJ's CEO, two different PBSJ CFO's, two different PBSJ Presidents and a whole host of others, all in an attempt to convince PBSJ that "going the FM way" would be the optimum business model for their firm. When I met him for the first time several years ago, Don Vrana, PBSJ's CFO, who is mentioned in the ABC Imaging press release, was new to the engineering industry and brand new to PBSJ. [He was hired by PBSJ to replace Scott DeLoach (the former PBSJ CFO who was arrested and later convicted for embezzlement.] I (we) had several meetings over the course of time with Don. One of those meetings was a 3-on-2 meeting; The CEO of NGI, me and one of our then Board members together with PBSJ's then President (Todd Keller) and PBSJ's CFO (Don Vrana). That was not the first meeting we had with PBSJ officers to share with PBSJ the workings of an FM relationship and how that business model would improve their business model. And, that was not the last. When I first joined NGI in late 1997, I was forewarned that PBSJ was a very, very traditional firm and was very set it its ways, reprographics-wise. They preferred to own or lease their "in-house" equipment and outsource whatever they could not handle "in-house." They were a substantial customer, one that I had (and still have) a great deal of respect for. All in all, great people at PBSJ, lots of business .... and they paid their bills on time. But, even though we had a great relationship with PBSJ, it, still today, gives me a headache that I was (we were) unable to convince them that they should commit to an FM relationship.

And, that, my blog-site readers, is why I chose to refer to ABC's PBSJ FM (OnSite) announcement as stunning. When I was there, we lobbied PBSJ for 10+ years. I've been gone from NGI for 2 & 1/2 years, and I would imagine that, even after I left, NGI continued trying to convince PBSJ that an FM service would be in its best interests. And, now, some 12 & 1/2 years after we began our efforts, ABC has now "swept all of the chips off the table." My congratulations to the ABC Imaging team on this stunning development, ...... but, I do think that Mr. Falsafi should send me a note of thanks for the extensive seed planting we did during the 10 year period I was with NGI. Smile.

Predictions about U.S. Construction Industry Recovery

In an article posted on Reed Construction's site on July 15, 2010, Jim Haughey, RCD's Chief Economist, authored an interesting article which gives insights into the "recovery" of the construction industry in the U.S.

Here's the title of the article:

Building Construction Recovery to be Strongest in Northeast and California
Insight and Analysis of Construction Industry Trends
Jim Haughey
RCD Chief Economist
Jul 15, 2010

Here's the introduction to the article:

Southern New England, New York, California, South Florida, Washington-Baltimore and four long depressed Midwestern cities will have strongest recovery for building construction, excluding single family housing, according to the May Expansion Index from Reed Construction Data. The index also suggests that the relatively hot housing markets in Texas recently will not cause a quick and strong recovery in Texas nonresidential construction.

- - - - - - - -

You can read the full article at this Internet address:

Joel's comments:

Also, you might want to save this Internet address for your future reading pleasure. This is the Internet address for "Notes from Jim Haughey" (the author I mentioned above who is Reed's Chief Economist.

As to ALL economists .... Right after I read "current" articles (opinions and insights), I find it interesting to go back and read earlier articles they wrote, simply to gauge if their predictions and/or opinions bore out.

Does it still work this way? - When the Architect gets paid, the Reprographer gets paid?

In an article posted on the AIA's web-site in late June, Jennifer Riskus, AIA's Manager of Economic Research, wrote an article that talks about business conditions in the Architecture industry, including insights into the ABI AIA Index, the commercial real estate lending environment, and "accounts receivable collections." The article includes charts and graphs.

Here's the title of that article:

ABI Slips Slightly in May as More Firms Experience Softening Business Conditions
More than 60% of firms anticipate being able to collect nearly all current outstanding receivables

By Jennifer Riskus, AIA Manager of Economic Research

And, here is an excerpt from that article:

Most firms anticipate collecting majority of outstanding receivables

As the economy has begun to improve, nearly half (40%) of our survey panelists reported that the outstanding time for previously invoiced receivables on active projects averages 30 to 60 days. Just 14% indicated that it was 90 days or more. The average number of days outstanding was approximately 60, although that time is shorter for firms in the West (53 days) and longer for firms in the Midwest (60 days). Small firms, with annual billings of less than $250,000, are also reporting shorter outstanding times for receivables while the largest firms, with annual billings of $5 million are reporting the longest times (43 and 69 days respectively).

In addition, more than one quarter of respondents (28%) anticipate that they will collect all of their current outstanding receivables, while an additional 35% expect to be able to recoup more than 95%. Fewer than 10% expect that they will never collect 25% or more of their current outstanding receivables. In the Midwest this share is higher: 15% of firms anticipate they will lose more than a quarter of their current outstanding receivables, compared to just 4% of firms in the Northeast. Firms with less than $1 million in annual billings are more likely than larger firms to report that they expect to collect all current outstanding receivables, but they are also more likely to anticipate that they may lose out on 25% or more of their current outstanding receivables.

- - - - - - - -

You can read the full article at this Internet address:

Joel's comment:

Years ago, when we were a small, young company in the reprographics industry, our cash-flow (collections of A/R) was highly susceptible to our customers' A/R collections activity. When the Architect did not get paid, we did not get paid. When the Engineer did not get paid, we did not get paid.

Wednesday, July 14, 2010

.... and an interesting article about "Top Project Starts" in Mid-Atlantic Construction News

Scott Judy, the author of the article I mentioned in the previous post, also wrote an article for the current issue of Mid-Atlantic Construction news...

This one is "more current" than the other article, since this one "points to" 2010 starts.

This author (Scott Judy) writes extremely well; his articles are quick-to-read, so get to it!

Here is the internet-address for the article I've mentioned in this post:

- - - - - -

Oh, by the way....... Scott Judy is Senior Regional Editor, McGraw-Hill Construction

Interesting article about "Top Project Starts" in Southeast Construction News

An interesting article that recently appeared in the current issue of Southeast Construction News:

"Top Project Starts, Despite the Southeast Market’s ‘09 Decline, Ranking of Major Projects Shows Improvement", by Scott Judy

The full article can be found at this Internet address:

In that article, they list the "top 20" project-starts in the Southeast in 2009.

For me, the most interesting "fact" about that list is that it appears that there are only 1 or 2 "commercial" non-res projects that made the list and, not surprisingly, a good amount of projects that are "stimulus" projects.

ABC Imaging acquires Graphic Reproduction, San Francisco area industry leader

From a press release found on ABC Imaging's web-site:

ABC Imaging acquires Graphic Reproduction, San Francisco area industry leader
Washington, DC—July 12, 2010—ABC Imaging announced today that it has acquired Graphic Reproduction of Concord, CA.

Founded in 1959 Graphic Reproduction has a long tradition of being in the forefront of digital printing and reprographic technology. Like ABC Imaging, Graphic Reproduction combines innovative technology with core philosophies of high quality and rigorous customer service.

"We are pleased to have the opportunity to be the new owners of Graphic Reproduction," said Medi Falsafi, President and CEO of ABC Imaging. "Our two companies are very similar—we both value quality and we both want to provide our customers the best possible service with every job."

For ABC Imaging the acquisition adds three production hubs in the San Francisco area. The largest Graphic Reproduction location, in Concord, CA, includes extensive production capability. The facility can print a full range of products using small, large, and wide format digital printers; 3D printers; and specialty printing and graphic arts equipment.

"Graphic Reproduction offers many of the same products and services as we do," Mr. Falsafi said. "We were attracted to the fact that they have always looked ahead and are early adopters of new print technologies."

- - - - - -

Joel's comments:

In ABC's press release, it says that Graphic Reproduction (GR) was founded back in 1959. While I never met Walt Walker, founder of GR, I certainly knew of him and of his excellent reputation. In late 1981 when I first met Paul Koze (former CEO of BPS Reprographics in San Francisco) and asked him "who are your major competitors in the S.F. market", he replied that GR was.

There is, though, some confusion on my part about "GR." It was my understanding that Ford Graphics entered the San Francisco market (sometime around 1989-1991) by purchasing Graphic Reproduction. And, with that acquisition, "inherited" a nice staffed FM relationship with HOK Architects. But, if Ford bought GR back then, then how can ABC be buying GR now? I think my confusion has something to do with the Walker family. I think the story goes something like this: at one time, Walt Walker was in business with his son and wife. And, at some point, the business must have been split (son/wife together with one of the parts and Walt with his own part.) Ford bought one of the parts, now ABC is buying the other part.

Hey, there must be someone out there who knows the real story about the Walker family and the entity that Ford bought when Ford first entered the S.F. market. How about letting me know, so I can correct this post.

Wow, it looks like competition is going to heat up in the San Francisco AEC Reprographics market. Now, Ford Graphics (ARC), ABC Imaging and NRI, three of the top ten reprographics enterprises in the U.S. (if not in the world) are going "head to head" in that major market and all three companies are "major players" in the AEC OnSite (FM) business! (Note: that situation already existed before ABC's acquisition of GR, since NRI opened last year and since ABC already had two locations in the Bay area. What's changed is that ABC has acquired market share.)

[p.s. now that I've had a few minutes to think further (i.e., reflect back in time) about this, I do remember being contacted by a business broker about Graphic Reproduction, but I don't recall if I was still with Rowley-Scher Reprographics at the time (that would have been in 1988) or if I was already out of the business (that would have made it around 1990 or 1991). I remember signing a confidentiality statement and later receiving information about the acquisition opportunity. But, that's all I remember. Hey, it's been along time and I'm old! Also, if my mind is working a bit sharper now (probably not), I think that it was (a) GR that Ford purchased and, at the time, the other Walker owned business (or soon to be opened other Walker business) was initially called Walker Reproduction. If that is the case, then perhaps, after a period of time, the Walker name was replaced by the former GR name?]

Tuesday, July 13, 2010

Reply to question about source of data used to develop the AEC Reprographics PPoP Index....

One of my blog-site readers just asked this question about the AEC Reprographics PPop Index:

"Joel, What is the source of the data you use? Who compilies the numbers? What vendors contribute to the data set?"


1) the data I'm using to compute the index is furnished to me. (In other words, I am not the "source" of the data, and I don't just "make it up." (SMILE)

2) after I receive the data, I first compile the data, and I then do the simple math that's required to compute the index.

3) As to your question about the source of the data I'm using to support the "index" of "plans printed on paper," I would love to be able to tell you the source(s) for that data, but, in order to get the data, I had to promise not to disclose the source(s). So, I'm sorry, I can't / won’t.

I would imagine that some in the AEC reprographics industry have already figured out where the data I'm using is coming from (I say that because of e-mails I've received, but I can't / won’t confirm or deny.) I am very aware that most who see the index will give it no credence because I'm not disclosing what data the index draws from. I don't particularly care whether people give credence to, or don't give credence to, the Repro PPoP Index; remember, my blog is my hobby, it is not a business. I can assure you that the index is not just a SWAG and that it is based on data that's directly related to "printing plans on paper", but there is no way for me to know if I've got enough data to say that the index is something that industry folks should pay any attention to. I will say that the data I'm using can in no way (i.e., cannot at all) be relied on to predict the future ups/downs of the reprographics industry.

(To the person who posted the comment that contained the questions, best regards, and I hope that it's not too hot in Arizona.)

Monday, July 12, 2010

Quarterly Index of A/E/C reprographer sales revenues from "plans printed on paper" (Q2 2010 update)

This is the 2nd quarter 2010 update to the index of the U.S.A. A/E/C reprographics industry's sales revenues of "plans-printed-on-paper".

The A/E/C Repro PPoP Index .....

This index does not attempt to track "total sales" of A/E/C reprographers. It attempts to track only sales of "plans printed on paper," which, traditionally and even nowadays, is the core (main) revenue generator for all A/E/C reprographers.

And, by "plans printed on paper", I mean A/E/C "plans", large-format, b/w and color, unbound or bound, full-size, half-size, whatever l/f size.

There will be a recovery in the A/E/C industry and thereby in the A/E/C reprographics industry. However, some are saying that even though there will be a recovery in the A/E/C industry, the recovery of sales revenues from "plans printed on paper" may not mirror the A/E/C industry's recovery, since some are expecting (I guess I should say, some are saying) that revenues from printing plans on paper are being negatively impacted by customers distributing CD's (or files) instead of distributing "hard copy" plans.

For this index, Q1 2006 is the ground-zero (base) point.

YR-- 2006-----2007-----2008----- 2009-----2010

Q1-- 1.00-------1.09-------1.10------0.65------0.55

Q2-- 1.06-------1.18-------0.98------0.65------0.60

Q3-- 1.08-------0.97-------0.85------0.57------

Q4-- 0.89-------0.93-------0.64------0.49------

This index indicates that the sales volume of "printed plans on paper" was off 40% in Q2 2010 compared to Q1 2006.

This index also suggests that the volume of "printed plans on paper" during the first half of 2010 is down just over 10% from the first half of 2009.

Your comments and questions are invited.

(This index is based on A/E/C Repro Vendor sales to A/E/C Reprographers)



Sunday, July 11, 2010

Get ready for the second leg of the recession?


I subscribe to Morningstar Research and, yesterday, Morningstar released a video where Dr. John Hussman, President of Hussman Investment Trust, was interviewed by Ryan Leggio, and Investment Analyst with Morningstar. After I watched that video, I visited the Hussman Funds web-site ( and found (and read) two different articles, both authored by Dr. Hussman.

On November 12, 2007, Dr. Hussman wrote an article, one that appeared on his company’s web-site, in which he predicted that a recession would soon begin. As we later learned, the current recession (although some would say we are now in a period of recovery although it does feel like we are to me) began in December 2007. In other words, Dr. Hussman’s prediction was “spot on.” I went back in time to read Dr. Hussman’s article from November 2007 before I read the article he published on July 6, 2010, simply because I wanted to see what he said back then before I read what he’s now saying. I am glad I read both articles. Both are a mixture of economics, investment, finance and public policy lessons.

The first article I read, Expecting A Recession, by 

John P. Hussman, Ph.D., November 12, 2007, can be found at this internet address:
In this article, Dr. Hussman basically says that a recession will soon begin, and he goes on to share the factors why he came to that conclusion. (As I earlier said, his prediction proved to be “spot on.”)

The second article I read, Implications of a Likely Economic Downturn, by 

John P. Hussman, Ph.D., July 6, 2010, can be found at this internet address:
In this article, Dr. Hussman basically says that we will soon be in another recession, or, if you want to call it this, a double-dip recession
. Like in his earlier article, he goes on to share the factors why he’s come to this conclusion. (As to whether this prediction will prove to be accurate, who the hell knows.)


As most people, who do any amount of reading about the economy, finance, investments, blah, blah, know, when leading experts are asked this question, “will the economy continue its recovery?”), 50% of the experts say “yes” and 50% of the experts say “no.” (Well, maybe it’s never quite 50-50, but I’m sure you get the point.)

I was not an Economics major in college, and, quite frankly, I struggled with Econ 1, 2 and with Econ 101. I did take accounting and finance courses (lots of them), not that I learned anything useful (I’m kidding, of course.) In spite of my lack of “economics background,” I’m going to now attempt to put a “reprographics industry – reprographics business” SPIN on Dr. Hussman’s articles. That’s because this blog is titled “Reprographics 101”.

As I pointed out in one of my earliest blog posts, I was involved in a reprographics business that was sold in December 2007. Our company had experienced a significant boom in business, for several years running, up until late 2007. Our “first-half 2007” sales were up over our “first-half 2006” sales, but, by the end of the third quarter, we were flat, comparatively speaking, 2007 vs. 2006. Because we sold the company in mid December 2007, I do not know how the company’s sales compared, Q4 2007 vs. Q4 2006 (quite frankly, having sold the company it was “not our problem” at that point), but, if I were to venture a guess, our Q4 2007 sales were less than our Q4 2006 sales, and, with that, it is quite possible that our full-year 2007 sales came in less than what our full-year 2006 sales had been. So, 2007 was an “up, then down” year. During the early to mid part of 2007, we had already begun to notice a drop-off in sales to customers who were involved in “civil, site, survey and land planning”; these are the engineering and planning firms that do work for new “residential” developments. The point of this paragraph being that, when Dr. Hussman, in November 2007, predicted that the economy would soon be in recession, we were (meaning, our company was) a “poster child” for that prediction.

When the residential design/development/construction industry went south, many were saying, “no problem for the reprographics industry, that’s only (residential is only) 15% or so of their business; commercial design/development/construction is fine and will carry the reprographics industry through the downturn in the housing sector.” As everyone in the reprographics industry *learned, “that’s not so.” A downturn in the housing sector leads to a downturn in the commercial (non-res) sector. The crisis in the finance industry certainly accelerated the downturn in the non-res sector, but, even if that acceleration had not happened, there still would have been a downturn in the non-res sector. It is the “natural trickle-down” effect, as I think I’ve talked about in past posts on this blog. (*Stock analysts and investors, who really had no clue about the reprographics industry, finally learned this lesson, I think.)

In light of Dr. Hussman’s most recent “recession” prediction, let’s take a look at “present indicators”:

• the design/development/construction industry is a huge part of the U.S. economy. Residential development is still weak, commercial development is still weak, and, unless the government puts additional money to work to stimulate public works projects, that sector is going to decline in activity, simply because states, counties and cities are suffering severe budget problems, brought on by lower tax revenues. Thesis: without a recovery in the design / development / construction industry, the chance of a double-dip recession remains high.

• At this point in time, around 800(!) U.S. banks are on the FDIC’s “problem bank” list. That’s because of soured (and, present tense, souring) loans and reduced capital bases. Many of the banks on that list (and the banks that have already failed this year) are on that list because of “problem” loans to the real estate sector (res and non-res.) As I’ve previously pointed out on this blog, developers don’t build unless they have access to (other people’s) money, i.e., loans to fund land acquisition, property acquisition, design/development and construction, and, when you read the Federal Reserve Board “beige book reports” and consider the CMBS (commercial mortgage backed securities) statistics, it is very evident (at least I think it is) that “lending” to the real estate development industry is still well off; money for development is still hard to obtain. This, in spite of the fact that interest rates are at an all time low!!!

• Even though the employment rate is (supposedly) down (recently dropped to “only” 9.5%), some say that the “real unemployment rate” is much higher than the one the government publishes. I’ve read some reports that say the “real unemployment rate” is in excess of 15%, if not higher. And, even though interest rates (for buying residential property) are lower (at an all-time low for that matter), qualifying for loans today is much more difficult than it was several years ago … and, speaking facetiously, it helps to have a job if you are applying for a loan. No job, no income from work, no loan, even if you have been able to maintain a good credit rating.

• The AIA ABI (Architectural Billing Index) has yet to move to 50 or above, and this condition has lasted (if I’m recalling this statistic correctly) for more than 24 months by now. When that index is below 50, “they say” that it is an indication that business (for Architecture firms) is still in a declining mode. Architecture firms are struggling. Firms in the construction industry are struggling. When you look at the monthly editions of construction industry newsletters, you see mostly “government sponsored” projects highlighted instead of private sponsored (res and non-res) projects highlighted.

• American Reprographics Company (NYSE: ARP) is the largest reprographics enterprise in the world, and, even though ARC has operations in India and China, most of ARC’s revenues are generated in the U.S. ARC’s quarterly revenues peaked in Q1 2008 at $187.4 million, and, since then, declined, consecutively, reaching just under $112 million in Q4 2009. ARC quarterly revenues for Q1 2010 were just above $112 million, in other words, not much better than Q4 2009. Those of you who know the reprographics industry well, very well know that Q1 revenues are supposed to be better than Q4 revenues; in most parts of the U.S., Q4 revenues are traditionally the worst of each year’s quarterly revenues. In addition, ARC does generate some revenues from its Chinese and Indian operations, and the economies of China and India are growing. It would be interesting to compare ARC’s quarterly revenues on a domestic vs. off-shore basis. It is possible that ARC’s domestic (U.S.) revenues in Q1 2010 were less than ARC’s domestic revenues in Q4 2009. ARC will soon be reporting its Q2 2010 numbers, so that should shed some light on “trend”. This paragraph is certainly not a “knock” on ARC, it is simply a picture of ARC’s progress, “now vs. then.” In my opinion, ARC has assembled one of the best management teams ever to grace the reprographics industry, but, no matter how good that management team is, the reprographics business will not be in a position to recover or grow until other factors begin to show positive recovery.

To sum things up, there has not yet been evidence of a recovery in the design/development/construction industry. “They say” that, since our economy is primarily driven by “consumer purchases”, that our economy has to see renewed consumer confidence – and consumer purchasing - in order for there to be a sustained recovery. Dr. Hussman’s most recent article points out that “savings” has grown (meaning that consumers – those that have jobs – are saving more and spending less) and that that actually hurts the economy. Several articles I’ve read this year point to the fact that larger corporations are sitting on (hoarding) lots of cash. Sitting on cash means that they are not investing that cash (in re-tooling their businesses, expanding their businesses, creating momentum for forward growth.) While we may be seeing increased profits, year over year, those profits are mostly coming from cost cuts (including job layoffs and consolidation activities), not from top-line (sales) growth. Top-line (sales) growth has to happen in order for the recovery to sustain itself. Without that (top-line sales growth), there is certainly the chance that we will experience a double-dip recession.

Dr. Hussman pointed out in his most recent article that some say that a double-dip recession is unlikely; they say…. "a few naysayers (like Dr. Hussman) are worried about a double dip, but this can be ignored because double dips are rare."

Dr. Hussman, also said in his most recent article …. “From a Bayesian standpoint (folks, that is “econ-speak”), if you always observe a certain combination of information when X occurs, and never observe that same data when X is not present, then even if X is hidden under a hat, you would conclude that X is most likely there. If I see clowns walking around the grocery store buying peanuts, and there's a big top tent with two unicycles in front of it in the middle of what is usually an open field, I'm sorry, I'm going to conclude that the circus is in town.”

Finally, if the economy is already again in recession or if double-dip recession does happen, what will that mean to the A/E/C industry and to the A/E/C reprographics business and industry???

Even though you may not agree with Dr. Hussman’s current prediction, I urge you to read the two articles I mentioned that are on his company’s web-site. If anything, you will learn some lessons in economics and you will see his point of view about government policy.

Sunday, July 4, 2010

Service Point Presentation at Annual Shareholders' Meeting

Service Point held its Annual Shareholders' meeting (2010 Annual Shareholders' Meeting) last week in Barcelona, Spain, and, in conjunction with that annual meeting, Service Point prepared a "presentation" file. If you read Spanish, you will be able to read the presentation. I was unable to find an English language version of the file. I think that the file contains information about SP's future plans and projections.

The file can be located at this Internet address:

Promoting MPS - Managed Print Services - an approach different than the one suggested in the article that was posted on July 1st.

On Thursday, July 1st, 2010, I posted an article, written by a veteran of the “managed print services” (MPS) business, and, in that article, the author, quite basically, suggests that one should not approach selling MPS services by “saying that” you (the vendor) can cut 30% of the customer’s current cost; in other words, the author was basically saying, “don’t sell price.”

While doing some industry research this morning, I came across an article on ARC’s “” blog-site, and, after reading this particular article, which apparently promotes ARC’s MPS services (even though it does not mention the term MPS), one could easily form the opinion that ARC’s approach to marketing its MPS services is exactly opposite the approach that the author of the July 1st post suggests should be the case.

I always find it interesting to observe the different approaches that companies take when marketing similar or same services.

Here’s the internet address of ARC’s “reprofessional” blog-site …..
It says on the site that the reprofessional is a monthly newsletter about document management, digital print technology and printing.

Here's the article that appeared on ARC's blog-site:

Spending Too Much On Print? Receive a FREE Print Cost Reduction Plan
January 2010

The real cost of print management for most companies is commonly invisible. Our experts can help you take control and reduce print costs up to 30% per year.

According to research from IT consultants Gartner Inc., up to 3% of your annual revenue is spent on print activities.
Effectively managing this activity can save up to 30% annually on your print services. Why?

Print is a typically uncontrolled budget item, largely off the radar of high level accounting or operations management.
Given the complexities of print fleet management, most print networks are inefficient. Multi-function printers are rare, printers are not replaced until they malfunction, and a wide range of printer brands increase IT administration and ink/paper costs.

The real cost of print is hidden. Color printing, single-side printing, the steep support costs of using multiple manufacturers, and the high energy costs of older printers all work silently against a company’s bottom line.

How do you take control? Let our experts conduct a no-cost print infrastructure analysis to see how much you can save.

Saturday, July 3, 2010

Service Point is planning a capital increase (???)

An article about the capital increase (share issuance) that Service Point is apparently planning to do:

One of my blog-readers brought this one to my attention this morning. This article comes from the web-site of ZEPHYR, About ZEPHYR……… ZEPHYR contains information on M&A activity, IPOs, joint ventures and private equity deals, with no minimum deal value.

Here’s what the article said:

Service Point plans fundraiser:
report, posted on Wednesday, 30 Jun 2010 14:38

Spanish print and reprographics group Service Point Solutions is planning a capital increase that could bring in EUR 10.00 million, according to Expansión.

The group incurred a net loss of EUR 10.02 million in 2009 and has already called for cash this year, tapping shareholders for EUR 21.77 million in a one-for-five rights issue in February.

Its latest planned capital increase could involve a stake of around 11.1 per cent of its post-issue equity, while the stock placement four months ago involved a 16.7 per cent interest.

Like many sectors reliant on a buoyant marketing industry, printers have been hard hit by the events of the last 18 months.

The group, which has service centres across Europe and the US, is engaged in digital reprographics and document and facilities management.

In the Nordic countries it has an online offering known as Repronet. Its international distribution network Globalgrafixnet comprises of digital reprographics companies in 21 countries.

In a Q1 2010 earnings release Service Point said improvement is gathering momentum; at EUR 4.30 million, earnings before interest, tax, depreciation and amortisation (EBITDA) – before non-recurring charges – was higher than it had been for four quarters and 79.2 per cent up on the EUR 2.40 million recorded in Q4 2009.

However, if a non-recurring cost of EUR 1.30 million is accounted for, EBITDA was flat year-on-year.

Service Point has been trying to cut costs and stimulate sales and says the performance of its new customer book is “healthy”.

This is not reflected in Q1 2010 revenue, which was EUR 52.26 million compared with EUR 54.41 million in Q4 2009 and EUR 58.69 million in Q1 2009.

Thursday, July 1, 2010

An excellent article about the MPS (managed print services) business

The article below came from this web-site:

It is a very well written article and the "points made" in the article are, well, right on point.

MPS: The 30% Catastrophe vs. The Reality
By Tom Callinan, Strategy Development

Category: MPS Industry Analysis | Issue: | Posted Online: Wednesday, June 30, 2010

Many commentators in the MPS space like to talk about the 30% savings companies receive through an MPS agreement. I guess it helps them sell research, advance the theory of displacing printers with departmental MFDs, or helps the weak sales person generate some commission and retain his (her) job for a period.

But I have to ask a simple question, what is the rational to deliberately taking 30% of the revenue out of our industry?
Overcapacity and technological improvements are already creating year on year decreases in hardware and aftermarket pricing and A4 is replacing A3 at a lower unit selling price. Those environmental changes should easily drive 10% of revenue per year out of our industry. Over the last two years units sales have decrease by more than 30%; they are gone and probably will never come back. Now we are all going to join in a concerted effort to drive an additional 30% of revenue out of the imaging space? Let’s all go to the jungle and drink some Jim Jones juice!

MPS is not new revenue, simply a revenue shift from transactional to contractual. We are not generating new industry revenue with MPS; different players are capturing the revenue, which is good for those MPS providers in the short term.

As the industry leading MPS consulting firm we have been advocating for companies to adopt an MPS strategy for nearly the past five years. Nevertheless, when you do launch your MPS strategy there is no reason to lead with a value proposition of saving a company 30%. Managing copiers, printers, scanners, and fax units is not a core competency for most companies; it is a nuisance area. Tying up valuable IT employees to remove misfeeds, install maintenance kits, or replace feed tires irritates CIO’s and IT directors who do not have enough resources to devote to their more mission critical projects like business intelligence, security, virtualization, and unified communications. Therein lies the value proposition—you build a business case for outsourcing.

I led a $225 million outsourcing business and that was simply the services revenue; there was an additional $60 million or so in equipment sold into the facilities management (FM) accounts. A portion of that $225 M was “fleet management” agreements. There are industry commentators who want to tell you MPS is not FM, but curiously those commentators have no FM background so how could they possibly make that statement? We didn’t sell outsourcing by telling companies we would save them money. At times it cost more money to outsource but the customer outsourced because we took away areas of their business that were not core competencies: Areas that distracted them from their business. Nuisance areas like imaging and printer fleets to most companies.

There were many FM agreements that included “gain share,” where working with the customer we drove efficiencies that resulted in lower cost that we shared with the customer. But the key there is the phrase “working with the customer.” You can do the same with an MPS agreement. Strategy Development’s three phases of MPS are manage, optimize and improve. Manage comes first followed by optimize and improve. Working with the customer—after you are generating revenue from an MPS agreement (manage)—you can help your customer make a decision on the lowest TCO device for each location that will provide the required functionality. This is where the cost savings come from, although reaching 30% is a stretch.

The most successful MPS companies in the country are not saving their customers 30% to get them to sign a contract. They are building business cases that support an outsourced agreement with their customers.

Get into MPS but make certain you truly understand the MPS space so that you maximize revenue and margins, it can be a significant revenue driver. But the opportunity to capture significant new revenue combined with the 30% decline in MFD unit sales, which is really hurting the core copier business, has brought out every snake oil salesman in the land with the latest “elixir” for an MPS program. Choose wisely as any further delay in launching a successful program will be critical. Once those prospects are another company’s customers they will be locked into contracts that will be difficult to change.

Tom Callinan is the founding principal of Strategy Development, a management consulting firm for the technology and outsourcing space specializing in business planning, sales effectiveness, advanced sales training, and operational and service improvement ( From 1998 – 2005, Callinan was an executive with IKON Office Solutions, most recently vice president and general manager of IKON’s largest business unit with revenue of $1.4 billion. Prior to IKON, Callinan was the founder and CEO of Copifax, Inc, a copier dealership that was recognized with numerous awards including inclusion on the INC 500 list of fastest growing private US companies. Copifax was acquired by IKON in 1997. Callinan graduated with high honors from The Wharton School, University of Pennsylvania. Tom can be reached at or 610.527.3317.

Service Point announces renewal of its Merger and Acquisition initiative

Immediately following this intro paragraph, you will find the “full text” of a Press Release Service Point issued on June 29, 2010. Immediately after the Press Release, you will find a few comments from me about the information in the press release.

Service Point to renew M&A activity in 2010

· The company is currently analysing and/or negotiating six potential transactions
· The Board has already analysed two potential acquisitions in depth
· Service Point expresses interest in Scandinavia and Germany
· The company does not rule out financing the deals with equity
· The transactions under consideration would be earnings accretive from day one thanks to our management, the companies’ standalone profitability and estimated synergies

29 June 2010. - Service Point Solutions, S.A (ticker: SPS.MC) will resume M&A activity in 2010 in a bid to boost scale.
So said the company’s chairman, Juan José Nieto, at the Annual General Meeting held today in Barcelona.

The company is in the process of analysing six potential transactions with companies with aggregate revenue and EBITDA of €85 million and €13 million, respectively. Juan José Nieto confided in the company’s shareholders that the Board has already analysed two of these acquisitions in depth. Until 2007, Service Point was acquiring an average of four companies a year. According to the company’s chairman, “we are ready to resume our acquisition-led growth policy, with a special focus on strategic markets such as Scandinavia and Germany”.

All the transactions under analysis would be earnings accretive from day one thanks to Service Point management, the companies’ standalone profitability and estimated savings. They would also give Service Point a foothold in new countries.

Service Point does not rule out financing these acquisitions with equity, issuing shares to the sellers. If the transactions at an advanced stage materialise, the first such equity issue could total €10 million, taking place towards the end of the third quarter. Over the coming 12 months, Service Point could raise equity again as a function of its business performance, investment opportunities, balance sheet strength and its share price performance.

During the AGM, Juan José Nieto also alluded to the company’s earnings performance. Service Point’s chairman expects momentum to improve as the year unfolds, saying that “cost streamlining combined with the revenue firming witnessed during the early months of 2010 will underpin earnings momentum which should gather pace as the year progresses”.

The company’s financial performance in 2009 was marked by the cost restructuring program which concluded last quarter, the results of which have topped the company’s own estimates. Service Point managed to cut costs by €21 million and capex by 51% last year. This cost-cutting, combined with the improvement in sales in most of the company’s operating markets, has paved the way for an inflexion in earnings in the second quarter.

During 2009 Service Point reinforced its sales effort to shore up organic growth and offset the dip in customer business volumes. At present, 48% of customers come from the corporate sector, 26% are classified as AEC (architects, engineers and construction), 12% are financial institutions, 9% belong to the public sector and the remaining 5% to the education sector. The company plans to increase the contribution of the e-commerce channel which is expected to generate 30% of revenue in the next couple of years, compared to 5% today. In 2010 Service Point is looking to continue to reinforce the company’s sales arm, particularly in the print-on-demand, web-to-print, facilities management and document management segments.

Juan José Nieto expressed his confidence that investors will acknowledge the work performed in recent years and the upside inherent in the company’s valuation. According to Service Point’s chairman, “the share price should recover as soon as equity markets stabilise. In addition, share price momentum could pick up as the company grows in scale by resuming its M&A activity.”

To demonstrate their commitment to the company, on 22 June the company’s directors agreed to earmark half their pay to buying Service Point shares, which will bring their combined shareholding in the company to approximately 31%. Last year the Board members cut their pay by one-third, a decision in keeping with the cost cutting program put in motion by the company one year earlier.

Service Point Solutions ( provides digital reprographics and document management services to the infrastructure, manufacturing, public and services sectors. It employs 2,300 people across eight countries (the UK, US, Spain, Germany, Netherlands, Belgium, Norway and France) via a network of 116 service points worldwide and 753 facilities management programs. SPS is headquartered in Spain and listed on the Madrid and Barcelona stock exchanges (ticker: SPS.MC).

- - - - - - - - - - - - -

Joel's comments:

If I correctly "interpreted" one of the statements Mr. Nieto made, Service Point is considering selling additional stock to the public, sometime later this year or sometime after that. And, based on another statement Mr. Nieto made, SP is considering doing some of its acquisitions for stock (instead of or in addition to cash or cash and notes.)

I just went to SP’s web-site to look at the historical price-per-share graph. If I read that graph correctly, SP’s stock price, at its peak, which was, I think, sometime around June 18, 2007, was around 4.25 Euro per share. This morning (July 30, 2010), SP’s stock price was .59 Euro per share. If I’ve done the math correctly, SP’s current stock price is about 86% down from its peak. By comparison, ARC’s stock price peaked at $39.00 per share on May 5, 2006. ARC’s stock price on June 18, 2007 was $30.68 per share. ARC’s stock price, this morning, was $8.51 per share. If I’ve done the math correctly, ARC’s current stock price is approximately 77% down from its peak and 73% down from its price on June 18, 2007. Given the size of the fall-offs in prices-per-share, SP and ARC, I would imagine that it is not unreasonable to say that there is plenty of room for the per-share prices of SP and ARC to increase, in other words, the potential for upside growth. However, I would think that, in order for their stock prices to go up, that’s going to require two very important things: 1. a return of investor confidence in - a) the health and direction of the overall economy and b) the renewed vitality and expected growth of the Design/Development industry, and 2. a return of a) sales growth, b) improved margins and c) net earnings performance.

Although most acquisitions in the reprographics industry - (and I'm saying this based on my own personal experience in the industry and my knowledge base of acquisitions that have happened in the past 30 or so years in the reprographics industry, and all that means is that I could be right or wrong; I'm not all that smart) - are done for cash or for notes, or for a combination of cash and notes, some acquisitions have been completed for stock (some with cash and stock, some with cash, notes and stock, and, yes, some for only stock.) But acquisitions 'for stock" are not very common in the reprographics industry, at least when compared to acquisitions completed for cash or cash and notes. Years ago, one of my friends in the New England area sold his reprographics company to a much larger company (at the time, a very aggressive acquirer) and he took some cash but mostly stock of the acquirer. Unfortunately, the stock he got was then valued at around $50 per share. That stock price later fell to under $12 per share (or even less, I don't recall exactly how far that stock fell.) Other friends, out West, sold their business, for cash and stock, to a public company. That public company, not too long afterwards, went into bankruptcy and its stock became worthless. It was a damn good thing that the sellers got most of the purchase price in cash, rather than in stock. If I'm recalling this correctly (or close to correctly), they got 80% of the purchase price in cash and 20% of the purchase price in stock. Selling for stock can be "dicey". Or, it can be a great thing. It will be interesting to see who, in the future, sells to SP for SP stock and how much of the purchase price is paid in stock (the latter, assuming they will reveal that.)

Finally, based on another statement made in SP's press release, competition in the German market is apparently going to heat up. I say that because ABC Imaging recently announced an agreement with a German reprographer (Raak Gmbh) and because SP said that its acquisitions are, apparently, going to focus on Scandinavia and Germany. SP already owns operations in Germany, so any further acquisitions in Germany will increase SP's market share of the German market. ABC Imaging, SP and ARC are already head-to-head competitors in London and in quite a number of markets in the U.S. However, ARC does not currently own any operations in Germany, nor, to the best of my knowledge, has ARC announced any plans to enter the German market.

As to SP's expressed intentions in growing in Scandinavia, being a U.S. guy I'm a bit geographically challenged when it comes to Europe, so I had to Google "Scandinavia" to see what countries are considered Scandinavian countries. The map Google took me to reveals that Iceland, Norway, Sweden, Finland and Denmark are all considered part of Scandinavia. SP's web-site says that SP has operations in Norway, but not (at least presently) in the other countries I just mentioned. Iceland's economy is having great difficulty. So, if, for the time being, we rule out Iceland as a near term SP target, that leaves Sweden, Finland and Denmark as the most likely targets for SP acquisition activity. The question is, which companies in Sweden, Finland and Denmark are currently SP targets? Well, time will tell, we'll see.