JAN FINEMAN - XAAR PLC (AXR.L)
CEO Interview - published 05/14/2001

DOCUMENT # MAG626

JAN FINEMAN is the Chief Executive of Xaar Plc. He joined Xaar in April
1999 when Xaar acquired MIT (now renamed XaarJet AB), where he had been
General Manager for two years. He was appointed to the Xaar Board in
August 1999, taking overall responsibility for all XaarJet manufacturing
and development operations in Sweden and Cambridge and was appointed
Chief Executive on October 17 2000.

SECTOR-ELECTRONICS

TWST: Please provide our readers with a brief history and overview of
Xaar.

Mr. Fineman: Xaar is a fast expanding creative technology-based public
company that specializes in the development and exploitation of unique
ink jet printing techniques. Based in Cambridge Xaar was established
around ten years ago as a spin-out of Cambridge Consultants Limited. The
major steps since then have been an IPO and acquisition of MIT, one of
the licensees of Xaar technology in Sweden. We are, today, a company
that offers proprietary ink jet technology with over 500 patents and
applications and we manufacture and sell these printheads to customers
in the office, industrial and commercial sectors.

TWST: So with such a large and diverse market as inkjet printing
technology, what would you say is your specific target market within
that?

Mr. Fineman: Xaar aims to be a core printing technology in the office,
commercial and industrial printing industries and as such we have split
our target markets accordingly. Xaar targets the office sector through
its licensees, such as Sharp and Konica and Brother. The prime target
for them is to compete with laser technology, high speed and high
quality colour printing. The development program for wide printheads is
targeted at the commercial print market. The industrial printing market
is addressed with Xaar's own manufacture and supply of Xaar printheads.
That is very much where the printhead is used as part of the
manufacturing process and used to print on cans, CD's, very wide banners
using super-wide format printers etc.

TWST: Who would you say are your main competitors within that space?

Mr. Fineman: If you look at the office printing market of course, the
competitors there will be HP, Canon and Epson. However, Xaar ink jet
printheads use Xaar's unique patented piezo ink jet technology and as
such means that Xaar has some unique features to offer the market.
Xaar's printheads offer a combination of several key factors: production
speed and high quality printing. It is also expected that, through
integration in print systems from OEM channels, Xaar's ink jet
technology will bring near-photographic quality to office, commercial
and consumer markets as well as having widespread applications within
industrial and consumer goods manufacturing markets.

TWST: What is your growth strategy in that area over the next 12 to 24
months?

Mr. Fineman: I think our focus of growth will be office printing. We are
continually looking to work closer with our licensees in order to drive
our common development. All our licensees need software, inks and media
and Xaar is taking a leading role to help and develop relationships in
order to speed up the licensing route and to generate growth for the
company today is coming from our own selling of printheads into what we
call the industrial market. And that was a 50% growth last year.
browsing, mission-critical data, file transfer protocols, service level
agreements, as well as high-quality voice is essential. So we think we
have got the most complete product. We think we have the markets
extremely well covered with the 5.8 GHz capability for North America and
Asia, as well as 3.5 for Europe and South America. Now in addition to
that, because the architecture is modular in nature, we are encouraging
partners to team up with us to develop both an MMDS capability for the
licenses that exist here in the States as well as LMDS capabilities for
licenses that exist worldwide.

TWST: Would that be the general focus of your sales and marketing
departments at this time?

Mr. Fineman: Yes it is. Industrial printing includes printing on
corrugated board, plastic containers, credit cards, CDs and ID cards,
case coding and printing with grand format and vinyl printers. It also
includes printing on flat glass and metal and ceramic printing ' these
are all heavy-duty uses of our printheads.

TWST: Correct me if I am wrong Jan, but your profits more than
quadrupled in 2000 as compared to the year prior. What do you attribute
that growth to?

Mr. Fineman: The main part of the growth has come from the manufacturing
and selling of our own printheads. We also had a very good year for
licensing income as well.

TWST: What do you see as the major challenges moving forward over the
next 12 to 24 months?

Mr. Fineman: We have a couple of key challenges. Firstly we are
targeting the growth of our licensees over the next year and are working
closely with all partners in order to bring more products to market. For
the industrial printing market, we have a very rapid growth. It is
really to continue to improve the performance of our printheads and
increase manufacturing capacity in order to meet growing demand. For the
commercial market we are developing our page-wide printhead in order to
exploit this commercially. The intention is that Xaar will provide wide-
array ink jet printheads for use in digital presses, high speed colour
copiers and volume production printers for the commercial print market
in the foreseeable future. Further applications include narrow web label
printing and packaging. Xaar is working with world class partners on the
page-wide printhead program. In 1998 Xaar signed a collaboration
agreement with Kyocera Corporation of Japan, which means that Kyocera
will manufacture the page-wide printhead on behalf of Xaar, and in March
1999, Xaar Digital signed its first OEM partner agreement with Agfa-
Gevaert N.V., one of the world's leading photographic and imaging
companies. The page wide printhead will be supplied by Xaar to OEMs with
a range of inks suitable for the OEM's target application. The matched
sets of printheads and inks will then be sold to OEMs who will integrate
the printheads into printing systems. There are still some challenges on
the technical side to overcome to reach a perfect print but the project
is progressing well.

TWST: What do you see as the major challenges moving forward over the
next 12 to 24 months?

Mr. Fineman: We have a couple of key challenges. Firstly we are
targeting the growth of our licensees over the next year and are working
closely with all partners in order to bring more products to market. For
the industrial printing market, we have a very rapid growth. It is
really to continue to improve the performance of our printheads and
increase manufacturing capacity in order to meet growing demand. For the
commercial market we are developing our page-wide printhead in order to
exploit this commercially. The intention is that Xaar will provide wide-
array ink jet printheads for use in digital presses, high speed colour
copiers and volume production printers for the commercial print market
in the foreseeable future. Further applications include narrow web label
printing and packaging. Xaar is working with world class partners on the
page-wide printhead program. In 1998 Xaar signed a collaboration
agreement with Kyocera Corporation of Japan, which means that Kyocera
will manufacture the page-wide printhead on behalf of Xaar, and in March
1999, Xaar Digital signed its first OEM partner agreement with Agfa-
Gevaert N.V., one of the world's leading photographic and imaging
companies. The page wide printhead will be supplied by Xaar to OEMs with
a range of inks suitable for the OEM's target application. The matched
sets of printheads and inks will then be sold to OEMs who will integrate
the printheads into printing systems. There are still some challenges on
the technical side to overcome to reach a perfect print but the project
is progressing well.

TWST: Could you tell me a little bit about your corporate culture?

Mr. Fineman: The corporate culture is very much a small high tech
company based at the Science Park in Cambridge. However, our main
manufacturing facility is in Sweden which was part of an IBM plant in
Sweden before. So we have got the traditional manufacturing people and
process engineering mostly focused in Sweden, and you have got the
innovative engineers and developing engineers mostly focused in
Cambridge. We are now integrating the best of both cultures.

TWST: And how do you go about attracting and retaining the best
employees?

Mr. Fineman: First, it is a fascinating market that we are leading when
it comes to making high performance, high quality printheads. At the
moment we have been very lucky in being able to attract people to the
company. We also offer competitive packages.

TWST: Now as far as your management team goes, can you tell me how they
are equipped to realize your goals over the next 12 to 24 months?

Mr. Fineman: I think we are very well equipped to meet future
challenges. The management team, consisting of the sales director, the
technical director, financial director and myself work closely together.
Our sales director has got an extensive knowledge and experience from
the IT sector of selling. The technical director is one of the inventors
of the technology, and he is still bringing forward new ideas. And we
also have on the board now our chairman Arie Rosenfeld, the founder of
Scitex. So we are quite well set with that mix to set clear targets and
objectives and move forward

TWST: Are there any key acquisitions or partnerships on your near
horizon?

Mr. Fineman: At the moment, there are no acquisitions planned. However
for the new wide printhead development program we currently work with
Agfa as a key partner for digital press applications. And with Kyocera
in Japan to be able to do high volume manufacturing. We are actively
looking to partner up with key players in areas like primary packaging
and label printing.

TWST: What is your opinion of your company's current valuation?

Mr. Fineman: We are moving up and down with the market even if the
business performance has improved steadily. We have done quite well over
the last month and I would say that we are doing our best to actually
bring value to our customers and the shareholders. In addition to our
proprietary technology and good cash flow base we have added the
potential for license and royalty income to secure good future growth in
value.

TWST: What would you say the long-term investor should focus on in terms
of what should attract them to your stock?

Mr. Fineman: I think what should attract them is that we have a leading
technology. We have a world leading development program in wide
printheads and we are just scraping the surface of the very large
printing market. Our turnover is very small compared to the total market
so there is a substantial potential going forward.

TWST: What specific accomplishments will make the next year a success in
your eyes?

Mr. Fineman: The conclusion, bringing to market and signing up of new
partners to our wide printhead development program.

TWST: Are there any large-scale social economic or technological trends
on the horizon that will affect your business?

Mr. Fineman: At the moment we have been quite lucky as our technology is
replacing old technology in many fields. There is of course a worry
about what will happen with the US economy. But otherwise, I think as
people move ahead and the individualization and personalization of items
is becoming more and more important than digital printing technology
will become more widely used. With digital printing technology you can
vary the information from page to page from brochure to brochure, or ID
card to ID card. The greater the demand for personalization the great
the need digital printing technology. And that is where we are
positioned.

TWST: What do you see as the greatest risks involved with your company?

Mr. Fineman: That is a good question. Our current products are on the
market. I think there is still a risk on the technology side that we
need to be aware of as we have yet to see the impact that our new
printhead developments will have and in the long term to be aware as
always of potential new technology coming to market.

TWST: And what affect if any, do government regulations have on your
company? And is there any legislation on the horizon that will impact
you in any way?

Mr. Fineman: None that we know of at the moment. There might be some
implications of environmental legislation when it comes to the type of
inks you can use when printing. This is likely to be driven not only by
ourselves but also by customers asking for environmentally friendly
inks.

TWST: As Chief Executive, what is it that you personally concentrate on
most of the time?

Mr. Fineman: I am concentrating on the actual strategic issues of
determining and identifying new markets for the company to target. We
need to focus on a few key markets and specific development programs not
to dilute our resources.

TWST: And lastly Jan, I would like to conclude by just opening up the
floor to you. Is there anything that we have not touched on in this
interview that you think is key that people should know about Xaar?

Mr. Fineman: I think we have touched on most things. The one thing we
have not talked about is the importance of us providing matched
printheads and inks? Both of those need to complement each other to give
a high performance. Xaar develops, manufacture, and sells printheads and
teams up with ink partners to develop and manufacture the most
compatible inks possible.

TWST: Thank you.

JAN FINEMAN
 Chief Executive
 Xaar Plc
 Science Park
 Cambridge CB4 0XR
 United Kingdom
 +44 (0)1223 423663
 +44 (0)1223 423590 - FAX
www.xaar.co.uk

Each Executive who is the featured subject of a TWST Interview is
offered the opportunity to include an Investors Brief or other highlight
material to be provided and sponsored by and for the company. This
interview with Jan Fineman, CEO, Xaar Plc, is accompanied by an
Investors Brief containing corporate information.

Copyright 2001 The Wall Street Transcript Corporation
All Rights Reserved


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