Dr Joe's Printing Industry Blog

Cadmus was bought by Cenveo. More to come, I'm sure, and I suspect Cadmus was looking for a deal. Well, so much for getting into packaging as a refuge for the problems in the printing business.

Mergers & acquisitions in a mature business is the last refuge of big companies who have trouble adapting to the new marketplace. It's also a great place to make money if you're an investment banker. It's not the stocks, it's the fees.

Remember, more than half of all acquisitions fail to deliver on the expectations held at the time of the deal. Markets change, management has to deal with unexpected events, and management cultures and styles take two or three times as long as expected to mesh. These transition costs are almost always underestimated, and don't always appear as lines on financial statements. They're often work undone, customers ignored, new inititatives that are delayed, executives unavailable to direct their workers because they are doing transitional "things."

And don't forget the upheaval among the employees... many of them leave and go to smaller companies and often do well there, bringing a level of experience that the smaller companies could not normally attract. Because management can't give them a straight answer about the viability of their jobs, they start looking elsewhere. It's not that management doesn't want to give a straight yes or no answer about the jobs of their underlings... it's that there is rampant uncertainty for all jobs, including the managers themselves.

That uncertainty also weighs on the customers. It's hard to have demovitated employees working with wary or confused customers. It's not the kind of situation that breeds confidence. What's worse, customers may lose printing company employees they like working with in the process.

As in most markets, their vibrance and innovation comes from the upstarts. In the printing industry's case, the upstarts are not necessarily other printers but purveyors of media alternatives who are competing for the same dollars.

Note that these recent mergers are defensive, they are not to create new markets or new opportunities or to ride new waves of demographic, economic, or technological change. They are a search for ways to adapt the same old tools to new problems. Most times they not work out anywhere close to what they hope. When they do, they are financially successful, but not strategically. There is a point where all the financial clean-up and straightening out has significant rewards and is complete. Then there's the next step: facing a changing marketplace with a winning long-term strategy. That's normally two years or so into a merger that it gets properly addressed, and often the company gets sold again to someone else who can supply that when the financial gurus can't.

Biggest issue? Starting out with a vision for what that newly merged company looks like in a marketplace at least five years from now and the working the reorganization toward that. If cuts are coming, better to make them swift and hard so that the new business gains a footing, even an uncertain one, early. There's nothing worse than a constant parade of "black Fridays" where people look in their check envelopes for the legendary pink slip.

And, just a reminder of what not to do... Radio Shack's mishandled dismissal by e-mail of this year:
http://www.breitbart.com/news/2006/08/30/D8JQV30O1.html

John Harland, check printer, is being bought by Ron Perleman's investment group.
http://today.reuters.com/news/articleinvesting.aspx?type=bondsNews&storyID=2006-12-20T145009Z_01_BNG8323_RTRIDST_0_JOHNHHARLAND-TAKEOVER-MANDFWORLDWIDE-UPDATE-1.XML
Near and dear to my childhood heart is Marvel Comics. Perelman bought that business and killed it, or at least he almost did. It's detailed in a good book called Comic Wars: How Two Tycoons Battled over the Marvel Comics Empire -- And Both Lost.
Review http://today.reuters.com/news/articleinvesting.aspx?type=bondsNews&storyID=2006-12-20T145009Z_01_BNG8323_RTRIDST_0_JOHNHHARLAND-TAKEOVER-MANDFWORLDWIDE-UPDATE-1.XML
Amazon http://www.amazon.com/gp/product/0785116060?ie=UTF8&tag=drjoewebbcom-20&linkCode=as2&camp=1789&creative=9325&creativeASIN=0785116060

3Q-06 GDP was revised down to 2.0%, as was expected. My expectation was based on the ISM manufacturing index heading down. Latest reports are that retail sales have started to surge the past few days... makes me wonder if 4Q-GDP may hit 3.0% which would be quite a surprise and would support the Fed's sense that the economy is still quite strong. Based on the heavy discounting going on, I would suspect that the inflation numbers would look pretty good.

What was really funny the past two days was the reports from MasterCard and Visa about how retail sales were down so much from last year. Ugh!!! When you adjust for inflation, this year was about the same as last year! Inflation is 1.8 percentage points lower than last year's increase, so you have to add that to the percentage increase to get a similar comparison. On top of that, I can't remember any year when retailers weren't complaining about holiday season sales not being what they expected. Of course, Amazon broke records again, and that's why the MasterCard and Visa numbers are so important, because they include e-commerce.

How did this slip away from me? A few months ago, VistaPrint announced it was working on some web site products for small business. http://www.vistaprint.com/vp/about/list_press_detail.aspx?pid=294

Then, today, this e-mail shows up:


Are these folks reading Dr. Joe? Seems like that :) What's next for them? I suspect it will be direct mail campaigns as is being marketed by InfoUSA http://www.zipmailusa.com/ and perhaps a business like www.constantcontact.com

When you get a file and it has an unfamiliar file entension, sometimes operating systems can't detect what program should open them. Those mysterious extensions can be deciphered or narrowed-down at http://filext.com/
I ran across a floppy disk that had a ".pre" file on it. The site reminded me that it was a Lotus Freelance file. Gosh, it's been 12 years since I used Lotus Freelance? Amazing... and yet again, another great Lotus product left to die, just like my once-beloved word processor, Lotus Manuscript. Equally amazing is that the files (DOS) can still be downloaded http://www2.support.lotus.com/ftp/pub/desktop/Manuscript/ . Lotus killed Manuscript and bought Ami from Samna Corporation, and it would later become WordPro (which had something akin to the "ribbon" that MSFT is making such a big deal about... except WordPro had it in 1995. Manuscript never made it to Windows. There are still features in there I miss.
Yes, there are others who lament the demise of Manuscript.
http://www.lionhrtpub.com/orms/orms-6-06/forum.html
Lotus Manuscript was a desktop computer tool way ahead of its time. It was the first desktop-based word processor that catered to the needs of technical documents. In an age when MS Word and Word Perfect were mere document-creating tools, Lotus Manuscript went beyond simplicity. It offered excellent technical word processing capability never before seen at the desktop computer level. The software was so far advanced ahead of its peers that it failed miserably in the market. Its demise after Version 2.0 in 1987 probably fueled the need for its competitors (Word and WordPerfect) to scramble to incorporate technical word processing capabilities... Some of the technically oriented functions offered by Manuscript in 1987 included Screen Capture, Keyboard Stroke Capture, Versatile Common-Language Thesaurus and Embedded Graphics. Most word-processing users of that era did not need those types of capabilities. So, the software mostly languished on the shelves of software stores. The software, however, found ready users among technical professionals — engineers, scientists and researchers. For the few years that it lasted, Manuscript was the word processor of choice for university professors in engineering and science. The technical orientation of the software made it complicated to learn and use. Even trainers cursed the software as they struggled to learn it well enough to teach it to others.
Lotus was a very sad story. They believed that IBM would have the stamina to stick with OS/2 against MSFT Windows, and they didn't. So Lotus Freelance, which was years ahead of Powerpoint, died from neglect, as did Lotus Organizer, which was killed by MSFT Outlook and Palm Pilots.