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 user 2009-02-03 at 4:42:59 pm Views: 60
  • #21681
    Circuit City was 2 percent of Lexmark’s inkjet revenue
    Lexmark Chief Executive Paul Curlander told analysts during the company’s fourth-quarter earnings call Tuesday that Circuit City, which is closing all of its stores, accounted for 2 percent of the inkjet division’s revenues in 2008.While that is not a large amount it clearly cuts into Lexmark’s consumer electronics presence.”Clearly the bankruptcy of Circuit City and its liquidation is disappointing from our perspective,” Curlander said.The electronics retailer had been a strong partner for Lexmark, and last year the two even cooperated on television advertisements promoting Lexmark’s wireless inkjet printers.At 2 percent of the inkjet division’s 2008 $1.55 billion in revenue, Circuit City would have meant roughly $31 million.

    The news comes as Lexmark’s inkjet division continues to struggle, as it has since the latter half of 2005.Lexmark products were also dropped by Best Buy stores last year.Revenue for the division dropped 28 percent, while the number of inkjet printers sold fell 43 percent.Since 2006, Lexmark has walked away from 20 percent, and then 30 percent more, of its inkjet printer sales, in an attempt to get away from people who don’t print enough. It has targeted its products to customers who print more, and it has invested in products that are likely to see more ink used, such as wireless printers that can be used by multiple computers.

    Larry Jamieson of industry tracker Lyra Research said the relatively small amount of sales at Circuit City wasn’t surprising.”Printers are buried in their stores,” he said. “It was really an afterthought. And there were a lot of brands in there, too. So Lexmark had a lot of competition.”One of Lexmark’s largest inkjet customers is Dell computers, which resells them under the Dell brand.Dell accounted for 13 percent of overall revenue in 2008, down from 14 percent in 2007, executives told analysts.

    Besides Dell, mass-market stores — the Wal-Marts, Meijers and Targets — are a vital place for inkjet. Tom Carpenter, vice president and senior equity analyst at Hilliard Lyons in Louisville, said he thinks mass market might account for about 50 percent of hardware and ink revenues for the division.Chief Financial Officer John Gamble Jr. declined after the conference call to discuss Lexmark’s retail sales.

    Gamble said after the call that the company is “working right now” to make sure anyone who bought ink at Circuit City can buy it elsewhere.”We have strong distribution today,” he said, noting people can always buy ink from posting on the site says that besides availability on and, “Lexmark will also make these cartridges available at Staples, OfficeMax, Office Depot and Inkstop stores in your area as quickly as possible.”