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Black And Blue At Indigo (Int'l Edition)

International -- Intl' Business: ISRAEL

BLACK AND BLUE AT INDIGO (int'l edition)

Pity investors who bought shares in Indigo last summer. The Israeli company's market value soared past $3 billion based on grand hopes for its short-run, computerized color printing. Chairman Benzion "Benny" Landa made the cover of BUSINESS WEEK's international edition as an example of Israeli high-tech success (BW--Aug. 21). But since a NASDAQ high of $64.75 on July 27, Indigo shares have been on a sickening slide, closing at $9.12 1/2 on Oct. 31. That's an 85% decline.

Although Indigo has gotten hit with one shareholder class action over the precipitous plunge--in August, when the stock was still north of $30--Wall Street analysts say there's no evidence that executives deliberately misled investors. Rather, the stock simply got ahead of reality and then crashed when the cost of introducing its machines turned out to be stiffer than Indigo had predicted.

NEW ADS. The main problem: Some print shops that bought Indigo's $500,000 E-Print machines found they weren't in use enough to pay for themselves. That threatened to frighten off other potential buyers. To solve the problem, Indigo is trying to raise awareness of short-run color printing among print shops' ultimate customers with ads saying: "Until now, color had to be printed in large quantities to be affordable. Not anymore."

How soon might Indigo rebound? Landa once predicted black ink as early as this year's second quarter. But that quarter showed a $7 million loss, and on Oct. 30, Landa predicted that the third and fourth quarters would be losers as well. With marketing staff working on shoring up existing accounts, he predicts that shipments of new units will actually decline. Landa's not predicting profitability until the second half of 1996.

The biggest loser is Landa himself, whose family has about 65% of Indigo stock. Israel's overnight billionaire is down to a little more than $300 million.By Peter Coy in New York

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