Indigo Soars 17.6% After Hewlett-Packard Investment - TheStreet

Indigo Soars 17.6% After Hewlett-Packard Investment

H-P will invest $100 million in the Dutch maker of digital color printing systems.
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Updated from 11:45 a.m. EDT

In an effort to extend its business from office printers to business publishing,

Hewlett-Packard

(HWP)

said Thursday that it would invest $100 million in

Indigo

(INDG)

, a Dutch maker of digital color printing systems, the companies said Thursday.

The move, representing the largest single investment that H-P's printing division has made in at least 18 months according to a company vice president, shares of Indigo finished up $1.16, or 17.6%, at $7.72. H-P finished up $1.06, or 1%, at $106.06.

Doug Johnson, H-P vice president of imaging and printing systems, said the speed of Indigo's digital, off-speed color printing systems won his company's favor. Palo Alto, Calif.-based H-P hopes to extend from the market for personal desktop and network printers to larger production systems of the kind used to produce brochures, marketing materials and the like.

The division's recent deals have been smaller and focused on so-called e-services companies, Johnson said. H-P said its research shows that 96% of printed pages are produced by commercial printers.

Jay P. Stevens, analyst for

Buckingham Research Group

, said the deal is exemplary of the industry's emphasis on racing products to market.

"These days, time to market is crucial," said Stevens, who rates H-P shares a strong buy and whose firm does not perform underwriting. "If there's a technology you're looking at that you don't have right now, it's frequently more efficient to buy the company."

Johnson said that appraisal was fair.

"We have a history of doing that, which has borne out well for us," he said. "Sixteen years ago, rather than develop laser technology, we partnered with

Canon

."