Revenue from thermal plates has overtaken that of proofing materials for the first time at the firm, which announced the expansion plan along with third quarter results.

The figures were described as a "disaster" by one analyst and led to its share price falling 13%. Creo has also admitted that it will not hit the 15% pre-tax income target it set for 2005, though it believes its $1bn sales target for 2007 is "definitely achievable".

After posting an 880,000 ($1.6m) net loss for the period, Creo is taking action to reduce costs and improve profitability. It is closing its Boston headquarters and will relocate to its Vancouver office. Almost 150 staff will be affected, with some 60 positions phased out.

Chief financial officer Mark Dance said the restructure would create savings of just over 1m per quarter by the middle of 2005. A review of costs will look at "every area where we're spending money... There might be activities that we just have to live without".

Chief executive Amos Michelson said: "We should not let these short-term issues distract from successes this year. Drupa was a big step in digital media business. We exceeded sales goals for the show on software and equipment, but were even happier with success for thermal consumables."

Sales in the three months to June 30 were up 8.8% on 2003 at 84.9m, but slipped on the previous quarter with Drupa pinpointed as the reason for delayed orders in the EMEA region, where sales fell 6.5%. Consumables revenues jumped 23% on the previous quarter to just under 12m, an increase of 77.5% year-on-year.

Story by Jo Francis