*NEWS*LEXMARK EXECS ANSWER QUESTIONS…..

Lexmark execs answer analysts’ questions
Lexmark
International hosted its annual Analyst Day yesterday, attracting about
75 to a day of speeches by executives who emphasized the company’s
strong past performance but reiterated that it has more work to do.
In
the afternoon, analysts peppered an assembled group of executives with
questions, many regarding the company’s recent quarter, in which its
earnings were 59 cents per share, down from initial estimates of 95
cents to $1.05. Here are some highlights:
Executives said Lexmark
currently has relatively weak shares in some of the industry’s
fastest-growing segments, such as color lasers and photo all-in-one
units.
CEO Paul Curlander: “We need to get into these growth
segments with a better penetration … What you saw is that in the key
growth segments, we don’t have the kind of penetration or market share
that we need. And so we’re kind of out of alignment of where the growth
is going on in the market right now. This is a problem, so we need to
work on it. That’s why we’re focused on doing investments.”
One analyst asked how soon Lexmark’s product offerings would be where executives desired.
Curlander:
“It is very hard to put a time frame on it. But I wouldn’t want to
mislead you to think it’s a one-year type of thing. We think this is
going to be a multiple year (progression).”
Several analysts asked
about Lexmark’s relationship with Dell, for whom it is one of four
companies that produce printers that are sold under Dell’s name. Dell
constituted more than 10 percent of Lexmark’s revenues in 2004. One
analyst asked what the effect would be if Dell relied more on its other
suppliers.
Curlander: “We look at OEM (original-equipment
manufacturer) as an incremental opportunity. We do it if it makes
business sense … If it were just cannibalizing what we otherwise
would get, we wouldn’t do it … It lasts as long as it lasts.”
Analysts also asked about the threat posed by companies that sell replacement ink cartridges for the company’s products.
Consumer
Printer Division President Najib Bahous: (Remanufactured) ink
cartridges have existed … everywhere around the world. … We measure
it, we understand it, and we basically contain it … We haven’t seen
it increase significantly, but it’s there.”