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 user 2003-11-20 at 11:48:00 am Views: 50
  • #7914
    Dell plans to expand its printer line beyond Lexmark

    After nearly a year of selling more Lexmark printers than expected, computer maker Dell is planning to expand its printer line by turning to suppliers other than the Lexington, Ky., company.

    CFO Jim Schneider said Dell wants to take advantage of the popularity of the printers by moving quickly to expand its lineup. “To expand our product portfolio, we have new products in development today with new partners that will be announced next year.” Schneider added that Dell has a strong relationship with Lexmark and plans to continue developing products with Lexmark as well.

    Dell’s decision to use multiple suppliers for printers comes as little surprise to Lexmark and financial analysts.

    “We always understood that we were Dell’s initial partner in printers and that they would have other partners,” said Lexmark spokesman Mark Yost. Yost said Dell sales make up less than 5 percent of Lexmark’s sales and Lexmark sees little financial impact from Dell’s decision to expand its supplier base.

    The companies will still work with each other to develop printers. Schneider said Dell would launch a Lexmark-built combined printer, scanner and copy machine this year.

    Steven Milunovich, an analyst with Merrill Lynch, said in a report last week that Dell will probably use other printer companies for products in markets where Lexmark is not a strong supplier, such as photo printing devices. “We see Lexmark’s glass as half full and view the Dell relationship as positive,” Milunovich said in his report.

    In September, Hilliard Lyons analyst Tom Carpenter predicted Dell would look beyond Lexmark for printers because Dell is trying to find as many ways as possible to cut into the market share and profitability of its closest rival – Hewlett Packard.

    “We believe Dell is exploring opportunities with Asian manufacturers whereby Dell can offer additional printers that chip away at industry leader Hewlett Packard,” Carpenter said. “Dell understands the strategic impact that the printing business has on its main competitor and is pursuing multiple angles of attack.”

    Carpenter added that as it expands its printer lineup, Dell will likely cut prices for both high- and low-end printers, another move that would hurt HP.