DECLINE IN LASER CARTRIDGE PRICING IMPACT LEXMARK's STOCK

  • 05 02 2016 429716a-cig-clearchoice-banner-902x177
  • futor_902x177v7-tonernew
  • ink-direct-banner-902-x-177-v-1-2-big-banner-03-23-2017
  • mse-big-banner-new-03-17-2016-416716a-tonernews-web-banner-mse-212
  • cartridgewebsite-com-big-banner-02-09-07-2016
  • 161213_banner_futorag_902x177px
  • banner-01-26-17b
  • clover-depot-intl-us-ca-email-signature-05-10-2017-902x1772
  • Print
  • 2toner1-2
  • 4toner4
Share

DECLINE IN LASER CARTRIDGE PRICING IMPACT LEXMARK's STOCK

 user 2010-03-22 at 11:16:39 am Views: 61
  • #23592

    http://www.trefis.com/articles/13535/declining-laser-cartridge-prices-impact-lexmarks-stock/2010-03-18
    DECLINE IN LASER
    CARTRIDGE PRICING IMPACT LEXMARK’s STOCK

    March  2010  Lexmark manufactures and sells laser cartridges
    primarily to business customers in North America and Europe.  Laser
    cartridge sales are an important source of growth for printer makers
    such as Lexmark, HP, Samsung, Canon and Epson.  We expect Lexmark’s
    laser cartridge pricing to continue to decline over time due to greater
    competition.

    Importance of Laser Cartridge Business

    We
    estimate that Lexmark’s laser business (printers and cartridges)
    constitutes 78% of the $34 Trefis price estimate for Lexmark’s stock. 
    The cartridge business in particular is important for two main reasons:

    1. 
    Printer Hardware Itself is Low Margin or Loss Making

    Many
    printer makers sell printer hardware at a small profit or sometimes even
    at loss in order to increase their penetration among business
    customers.

    2.  Laser Cartridges Have High Profit Margins

    Low
    margin printer hardware helps to lock-in cartridge customers.  This
    makes it easier for printer makers to make higher profits by selling
    more expensive proprietary printer cartridges to customers.

    Laser Cartridge Pricing Expected to Decline
    CLICK ON THIS LINK BELOW TO SEE LIVE GRAPHICS
    http://www.trefis.com/company?hm=LXK.trefis&hk=56807559c3b53c67f1d6249b70a9959615e5b286#

    Printer buyers are increasingly aware of the long-term costs
    associated with printer cartridges and adjust their printer purchase
    decisions accordingly.  This is leading to a price war among cartridge
    manufacturers in order to drive the unit sales.  As a result, Lexmark’s
    average laser cartridge price has fallen approximately 18% from $235 in
    2005 to $192 in 2009.
    Going forward we expect Lexmark’s laser
    cartridges prices to decline rapidly and reach $147 by the end of Trefis
    forecast period.  This decline is attributable to the following
    factors:

    1. Lexmark will try to pricing aggressively to
    compete with market leaders, such as HP and Canon, given the large
    cushion of margins in the cartridge business

    2. Cheaper
    cartridges from third-party manufacturers will partly contribute to the
    decline in prices

    3. Decline in manufacturing costs every year
    will facilitate competitive price reductions

    You can modify
    our forecast above to see how Lexmark’s stock could be impacted if the
    decline in cartridge prices were greater than we forecast.