DELL IS 10% OF LEXMARK's BUSINESS (DOWN FROM 2009)

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DELL IS 10% OF LEXMARK's BUSINESS (DOWN FROM 2009)

 user 2011-02-09 at 9:40:29 am Views: 44
  • #24038

    http://www.kentucky.com/2011/02/07/1625750/dell-still-lexmarks-biggest-buyer.html#more

    DELL IS 10% OF LEXMARK’s BUSINESS (DOWN FROM 2009)
    Computer
    maker Dell remained the top customer of Lexington-based printer maker
    Lexmark International in 2010. Dell accounted for 10 percent of
    Lexmark’s revenue during the year, down from 12 percent in 2009.

    Lexmark
    manufactures printers for Dell, which then sells them under the Dell
    brand. That business, commonly called OEM for original equipment
    manufacturer, has declined in recent years. Dell accounted for 13
    percent of revenue in 2008 after having been 15 percent in 2005, 2006
    and 2007, when Lexmark’s total revenue was higher than it is today.The
    declines, though, have some upside, said Ed Crowley, founder of
    Versailles-based printer-industry research firm The Photizo Group.”Quite
    honestly, it wouldn’t surprise me if that wasn’t OK with them,” he said
    of Lexmark management, explaining that profit margins are typically
    lower on OEM products than on printers sold under a company’s own
    name.”As a smaller player … you’re going to want to get some
    high-margin business,” Crowley said. “Margin becomes more important than
    volume. That will drive a lot of decision-making.”

    Perceptive Software
    Lexmark
    announced Tuesday that its recently acquired Perceptive Software
    business generated revenue of $22 million in the fourth quarter. That
    was up 11 percent from the third quarter, executives said. The
    Kansas-based company develops software that helps businesses manage
    content. During the fourth quarter, Perceptive released its first
    application co-developed with Lexmark called “Interact.”

    Research spending up
    For
    the first time in several quarters, Lexmark spent more on research and
    development year over year. During the quarter, the company spent $96.7
    million, up from $93.3 million a year ago.Chief Financial Officer John
    Gamble Jr. told analysts that the increase came because of the
    acquisition of Perceptive Software. Before that, the company had been
    consolidating some projects, which led to the decline in spending.

    No stock repurchases
    For
    the second consecutive year, Lexmark did not repurchase any of its
    outstanding stock in 2010. Before 2009, the company had been
    aggressively buying back stock, including spending more than $1 billion
    in 2005 to buy 17 million shares.The company halted purchases in recent
    quarters as much of its cash is overseas, and it would have to pay a
    certain amount to be able to bring it back to the United States to fund
    share repurchases.The company had billed the program as a way to return
    value to shareholders, but some industry observers were
    skeptical.Crowley said Lexmark’s moves the past two years are wise.
    Given its smaller size compared to rivals like HP and Canon, the company
    should spend its cash “on development and buying other companies, which
    I think drive more shareholder value long-term.”

    Printers hailed by critics
    Lexmark
    has been calling attention to critical praise of its recent laser and
    inkjet printer lines. In an internal assessment released during the
    earnings period, Lexmark announced its printers earned 24 percent of
    industry awards in 2010 while its next closest competitor earned 13
    percent.The company also began 2011 by having its new Genesis all-in-one
    inkjet printer recognized at the Consumer Electronics Show. The printer
    boasts new scanning technology that essentially uses a camera to take a
    snapshot of documents that need to be scanned. It replaces the common
    older scanning method in which a scanner moves more slowly across an
    image.

    http://www.kentucky.com/2011/02/07/1625750/dell-still-lexmarks-biggest-buyer.html#more