2006 A Very Good Year For Print

All the data for 2006 supports a one year rebound for print. This is the first time in 10 years that the LTM shipments for this important communication sector have been better than the previous year. The era of print as the offline media step child is over. Print, as a viable alternative channel for a balanced media communications, has settled into a well deserved niche in any plan. Whether building brand or store traffic, print in conjunction with the web, radio, newspaper, PR, commercial TV, and cable providethe marketing team with a host of ways to allocate the media spend.

The successful IPO of InnerWorkings, iwprint.com, is a testament to the strength of merging the web with conventional printing services. While still in its infancy, the ability to negotiate price on simple or complex printing jobs via a web browser and hosted site is a tremendous advantage for both the buyers and then the printers with underutilized capacity. I have used IWP and it works. Any print buyer can easily navigate the site, shop for price, and then purchase the printed piece. Delivery and quality are guaranteed by IWP. The only potential glitch in the process...does the printer deliver what is expected and if not, how much does this cost IWP to make the customer and printer happy. This is the real test of the models execution. It should work if the execution is consistent. Will it? This remains the question for investors and print buyers/printers as well. With over $90BB in commercial print, the potential for a big win is there.

Beware of printers who cry foul regarding the web versus those that embrace a multi media approach to supporting a customer. With the growth of iwprint.com and VistaPrint in this segment, we find two companies that have capitalized on the value of the web to bring some level of utilization competence to the unused capacity that plagues this industry.

Lastly, the RR Donnelley Banta merger is a win-win for the customers and supplier in this segment. The purchase of Perry Judd's and Von Hoffman is a good continuation of the revenue built by purchasing the smaller company in existing segments that will need the cash flow of Donnelley to support continued investment in capital equipment. RRD is a value added printer with a vision and strategy that merges print with all elements of any company's media or customer communication needs (including back office). Cenveo will continue to bring value to those acquired by Burton as they bring a superior cost reduction model to those public companies who do not understand their cost structure. Cenveo's strong management forced Banta to quickly change its business model and eventually led to its sale. Recent smaller acquisitions continue to fit into Burton's vision for share growth and market penetration. Lastly, the printing industry had a great year overall.

Total shipments for the year were $91.4 B versus last years $89.8 B. Much of the success has come from the digital world of affordable 4/c printing from any number of quality suppliers...Presstek, Kodak, Xerox, and HP to name a few. These print on demand solutions for short run and targeted pieces help reduce waste and improve campaigns for the big company and the one person start-up as well.

All in all, a very fine year! First quarter 2007 will tell us if we have hit a bottom for a period or 2006 was just an aberration in a continuing free fall of year over year results. When the NY Times wonders if it will be printing a complete newspaper in 5 years, one hopes they are just thinking out loud to warn shareholders regarding earnings. My estimate, they will still be printing, but a smaller size and more 4/C.