IKON and Steel Partners - How IKON Will Be Sold

Who is this Steel Partners? And what does it mean to IKON or to anyone in the industry?

Here is a time line of press releases:

Friday, March 4, 2005 -Aggressive fund buys into Ikon Office Solutions stock

A New York investor ... has acquired 5.4 percent of the outstanding stock of Ikon Office Solutions Inc.

Steel Partners II LP, a hedge fund run by Warren Lichtenstein, bought 7.55 million shares of Ikon for about $86.8 million between Nov. 11 and Jan. 13. Steel disclosed the purchase in a form investors must file with the Securities and Exchange Commission when they acquire 5 percent or more of a company's stock.

Steel said in the filing it thinks Ikon's stock is undervalued. It also said it intended to talk to Ikon's management and board of directors about the company's business, operations and future plans...

Matthew Espe, Ikon's chairman and CEO, said he's glad Steel invested in the Malvern, Pa., company, which is the world's largest independent distributor of copiers and printers.

"We understand their philosophy and they understand our strategy and we think it seems to be aligned," he said.

...In 1998, a shareholders group headed by Lichtenstein won control of the board of Aydin Corp., a Horsham, Pa., maker of communications and telemetry systems. Lichtenstein was installed as chairman and the next year the company was sold to L-3 Communications Holdings Inc. for $75.7 million.

In 2002, another shareholders group led by Lichtenstein was elected to the majority of seats on the board of directors of SL Industries Inc., a Mount Laurel, N.J., maker of power and data quality control equipment. The board subsequently installed Lichtenstein ...

...Steel has been investing in bigger companies of late. The Business Week article said Lichtenstein now focuses on firms worth around $2 billion.

Ikon fits into that category. And the company has been making the kind of moves Steel seems to like.

Last year, it (IKON) sold its U.S. office equipment leasing business to General Electric Co. for $1.5 billion and used the proceeds to pay down debt. It also began taking steps to improve its sales effectiveness, gain share in markets where it's under-represented and target product segments with rapid demand growth.

Espe said the recent cost cuts weren't related to the investment by Steel...Instead, he said, they were part of his strategy to clean up Ikon's balance sheet, boost its growth and cut its costs. Espe thinks that strategy, and Ikon's success in implementing it, is what attracted Steel to Ikon.

"They see the upside," he said, "and I like having investors that see the same thing I see."

-July 07-
IKON Office Solutions: Steel Partners II Recommends Recap Via $850M Self Tender Offer

The Death of Xerography

One of my installs.  We removed many XRX's.  This was the "Plant Holder".

May, 2008.

One of Corey's recent posts talked about Xerox not selling copiers...

This post talked about how Xerox's Chief Innovation Officer(Sophie Vandebroek) was quoted in a video interview by Scobleizer as saying, "Xerox doesn't sell copiers anymore..." Interestingly enough, I had just posted on my blog regarding an editorial in L.A. Times by Gary Gardner, May 9, 2008, which stated, "...Consider the idea of businesses offering services instead of goods in today's economy. Xerox has shifted from selling copiers (goods) to leasing them (a service), which gives the company, as perpetual owner of the leased machines, a strong incentive to manufacture them to be refurbishable. This greatly extends the life of materials and reduces waste..."

Of course I chimed in with a comments on both the L.A. Times and Corey Smith's board.

What is most interesting is that Sophie responded with a comment of her own on Corey's blog. She said, "...Fact is, our customers rarely want standalone copiers anymore. Our technology has evolved significantly since those analog days. The vast majority of our office products are multifunction devices, they’re networked; they also print, fax, scan, flowport, link to applications via EIP, etc… Maybe my statement was too broad brushed — but the intent was to say that we’re really not a copier company anymore. Our customers demand much more and that’s what we give them..."

And from this article at CW by Gary Anthes, Gary asks Sophie, "What do you say to people who think of Xerox as just a photocopier company?

- Within the research and technology community at Xerox, we no longer do any work on photocopiers. What Xerox really focuses on now is how do customers deal with document-intensive processes, whether it's a lawyer dealing with all the paperwork required to win a legal case or a mortgage company dealing with all the paperwork. There are many document-intensive processes, and in most cases, they are pure digital documents."

Did you see that? Read it again, the RED parts.

No new R&D in photocopiers - Xerography is Dead.

Ok, so I guess Xerox really doesn't sell copiers anymore! Oh and don't forget the 1.4 billion dollar investment HP made in R&D for Edgeline...

Ms. Vandebroek's statements reflect the marketing position that Xerox isn't a photocopier company, it's much much more. 

And there is nothing wrong with that.

Is Anyone Really AFRAID of Edgeline?

From an opinion post on the Print4Pay Hotel Thursday, May 24, 2007 - Here are 15 points reflecting why Edgeline is not to be feared - remember, this is exactly one year ago, today. My responses in RED.


Who's Afraid of HP Edgeline CM8000 Series? ...


"1. No Offset Stacking: I can't believe they made this big of a machine with offset!
2. No 3 Hole Punch: Again WOW! - Big Deal.
3. Limited Card Stock: Only through the by-pass (I think this unit is rated for max 58lb only) - And? So?
4. 11x17: The trays are very slow on 11x17 and the by-pass seems faster! 11x17 is slower, but how often do you need 11x17 in business color environment?
5. Misfeeds: While it doesn't misfeed much at all, if a user leaves a misfeed in over the weekend it will dry out the print heads (ouch!) - Interesting, haven't heard that one.
6. Weight (725lbs): Can not use a stairclimber because there are no stress points! - not true
7. Black cpc: It's not the ink price that will get you but the cost of the maintenance kits! - LOL! service agreement covers that, but there are not any traditional "maintenance kits"
8. Availability for the next six months: slim enough that we are looking to pick up another line! - currently moot.
9. CPP for color: Business .05 and Professional .06 cents per page! - yup.
10. Strangely enough, the letter paper only runs thru the machine in landscape orientation from the LCT (can't even load portrait/speed). - this is true, see my post
11. Standard 1,500 sheet paper supply only! - LCT is 4k
12. VERY slow FCOT (First Copy Out Time) 12 seconds. - yup, 80-90% of documents are printed
13. Ink cartridges load from the bottom of the device (Oh my Back!) - LOL! give me a break
14. To protect the print heads from electrostatic discharge, be sure to touch the
horizontal metal bar to ground yourself before clearing jams that are near the print heads. The print heads are above the print-drum area. - Never heard of this.
15. HP recommends that you do not use this device for printing on sequential paper, such as pre-numbered checks or invoices." - OK, the Edgeline doesn't do MICR.


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I guess I could further debate the above, but "facts are stubborn things" - it really does take 12 seconds for the first copy to come out. And there is not now, although I hear and friends of mine have actually seen, a three-hole punch option. I recommend pre-drilled paper. This reduces the environmental impact by eliminating "harmful" paper dust and litter(the little paper dots).

If we sweep all the technological advantages and perceived functional disadvantages aside what we have left is a product that is immediately familiar to IT directors. A product that fits quite well "within it's designed parameters".

I caution all my prospects right from the get-g0; "this machine is not designed for anyone who will make their living off of the quality of color output." If the prospect pulls out a "loop", I have failed in the qualification stage begin to pack my stuff and exit.

The point being, Edgeline fits in a specific business space. Not production. Not desktop. Business color - oh and the above points, although a year old today, smell of fear.