Israel on Wall Street

Israel’s high-tech pioneer, Scitex Corporation Ltd. (NASDAQ:SCIX), is meeting the challenges posed by the fast dictated technological changes and the Internet, by building a network of leading, innovative companies. "Speed is the key factor in today’s economy," explains Yoav Chelouche, President and CEO of Scitex, and the force behind the new strategy. "The best way to achieve speed is to create smaller, fast moving, highly focused, innovative companies – to change from a single company with a single brand, to a network of companies."

"The new economy is not only about new technology but also about new business formations," Chelouche says. "This strategy has created a huge amount of energy and enthusiasm, and increased our resources and potential." In April this year, Scitex announced it would dedicate itself to building a network of innovative companies, focused on combining digital imaging technologies with the power of the Internet.

Chelouche emphasizes that Scitex is an "opervesting" (operating and investing) concern. The new Scitex is focused on key fields of activity, and takes an active role in the running of its companies. This move, according to Chelouche, was designed to create focused, entrepreneurial, fast-moving companies, which would attract high-caliber talent and external financing such as venture capital funds, thereby increasing the resources available for R&D.

"Total R&D spending by the group has doubled," says Chelouche.
Scitex's network of companies operates in three business areas: (1) Digital printing: mainly innovative, inkjet-based technologies that position Scitex as a world leader in the printing of the future. (2) Digital preprint: through its holdings in Creo Products Inc., Scitex holds a significant position in the digital preprint market. (3) The Internet: Scitex has invested in and created start-up companies that develop imaging technologies for the Internet.

"Imagery is an area of Scitex expertise, and dealing with the band-width and large volumes of data transmission required for imagery will be a big area of Internet growth," Chelouche says.
The Scitex holdings in the various companies vary from 100 percent in some, down to 13 percent in others. "We are adopting a flexible model with different holding percentages, allowing us to move faster," he adds.

Scitex’ investment strategy includes acquiring companies with complementary technologies, investing in Scitex spin-offs and in start-ups operating in fields in which Scitex has its core business. Scitex acts as an industry expert for the companies it invests in, leveraging its name, brand and understanding of the imaging industry, to attract VC funding. It also encourages dialogue between the companies in the network, which generates commercial links and collaboration.

Founded in 1968, Scitex was one of Israel’s first high-tech successes. In 1979, the company launched the world’s first computerized, color prepress system, establishing Scitex as the supplier of choice to printing industries worldwide. Always operating at the cutting edge of technology, Scitex has also been instrumental in defining industry standards for preprint products, and was quick to identify the revolutionary role inkjet technologies would have as the industry moves towards digital printing.

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