Scitex (SCIX)

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Hurd's HP Vision Clearer: Scitex Asset Buy Finalized
Danit Lidor, 11.02.05, 7:34 PM ET

NEW YORK - No one can accuse Hewlett-Packard Chief Executive Mark Hurd of slacking off. After a turbulent year of top-level executive changes, investors and analysts feared that the company, still in recovery from its merger with Compaq, was losing its stride.

But Hurd has plowed ahead, molding Hewlett-Packard's (nyse: HPQ - news - people ) Imaging and Printing Group's top position in the market place. He's had to navigate the increasingly steep competition from Dell's (nasdaq: DELL - news - people ) cheap printer prices. But while competitors like Lexmark (nyse: LXK - news - people ) suffer in the increasingly mature market, Hurd has kept the printing group profitable by pursuing high-end niche industrial segments of the industry.

Tuesday, HP announced it had finalized the $230 million acquisition of most of the assets of Scitex (nasdaq: SCIX - news - people ), an industrial wide-format digital printing company. This fall, Hurd heralded the company's arrival in the commercial wide-format and graphic arts market by inking several partnerships with big players in the emerging field, like Seiko/Infotech and Kodak (nyse: EK - news - people )-owned Creo. He also created a new printing subdivision--the Graphics and Imaging Business Unit--that will exclusively focus on the industry.

Analysts have criticized Hurd for acquiring hardware companies rather than pursuing more profitable service markets, but one of the perks of running an $80 billion company is that he can choose to take over a market by simply buying into it. By creating a one-stop commercial printing shop, HP offers simple solutions to its consumers. If Hurd plays his cards right, the services and supplies revenue follows.

Third quarter results indicate that Hurd's strategy will be successful: while consumer hardware revenue only grew 1% year over year, commercial hardware revenue is up 5% and consumables are up 6%. The entire image and printing group reported revenue of $5.9 billion, up 5% year-over-year.

Hurd and Chief Financial Officer Bob Wayman will announce fourth-quarter earnings on Nov. 17th. While it's too soon to see results from the partnerships and Scitex acquisition, investment in the Graphics and Imaging Business unit should indicate how seriously the company is approaching the new market.

http://www.forbes.com/facesinthenews/2005/11/02/hp-hurd-scitex-cx_dal_1102autofacescan14.html?partne...

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