- This topic has 0 replies, 1 voice, and was last updated 9 years, 9 months ago by
.
-
Posts
-
Is Lexmark Spending Enough On R&D To Beat HP?
Jul.
, 2007Lexmark Chairman and CEO Paul Curlander Tuesday defended his
company’s spending on research and development compared to rivals like
Hewlett Packard.Curlander’s comments came as he acknowledged Lexmark
suffered a “disappointing” second quarter, during a conference call
with Wall Street analysts to talk about Lexmark’s earnings.Richard
Gardner, an analyst with Citigroup, New York, questioned Curlander
sharply over Lexmark’s R&D compared to rivals and even asked
whether the company had to make some “tough decisions” about its
flagging inkjet business.”I was wondering if you would acknoweldge a
big problem in (Lexmark’s) inkjet (business) is lacking print-head
technology,” Gardner said. “Given that your competitors are spending
five and 10 times as much on inkjet R&D technology as you are, I’m
wondering how you can atch up at this point, cost-effectively, and, as
you say, spend as much as you need to spend on R&D to get back to
where you’d like to be in the consumer segment?””And, if that’s
impossible, why not just make some tough decisions about that
business?,” Gardner asked.Lexmark, which reported
second-quarter earnings Tuesday that showed declines in revenue and
earnings, blamed much of its recent softness on slow sales of both
inkjet printers and inkjet printer supplies. At the same time, rival
Hewlett-Packard, Palo Alto, Calif., has een aggressively integrating
its proprietary print-head technology into its inkjet devices to
increase performance and push pricing down. Curlander, in response to
Gardner, defended Lexmark’s R&D and technology spending.”I would
tell you, clearly, we are focused on improving our technology in the
products,” Curlander said. “The comments you make about competitors
spending more on technology than Lexmark – – those are correct but
that’s not a new situation for Lexmark. Since the company started in
1991, we’ve always faced significantly greater investments by the
competition than we’ve been able to afford. And the way that we have
survved, the way that we have succeeded and competed is we’ve focused.
We don’t try to do everything the competition is doing.”Among other
things, though, Lexmark recently began integrating wireless
capabilities into some of its consumer printers, betting that un-wired
printers would become a key point of leverage in the market.Curlander
said HP, the marker share leader in the printing space, is pushing its
inkjet technology into segments including light production and
wide-format priting. Lexmark is focusing on driving its inkjet business
into the consumer space. Curlander brushed off the suggestion that
Lexmark get out of that segment.”Relative to how we see the inkjet
business – – obviously we’re disappointed with the result we’ve had
here,” he said. “We’re not happy with where we are relative to
profitability. But we do believe, long-term, that inkjet can be a
profitable contributor to Lexmark. It has been in the past.”Mike
Hicks, CEO of Electronic Business Machines, a Lexington, Kentucky-based
solution provider and Lexmark channel partner, said his business not
focused on the inkjet segments. “Personally, I know they would like for
us to sell more,” Hicks said. “I don’t worry about that aspect of it.”
Hicks said he is more focused on commercial-grade, color laser
technology – – an area where Lexmark did not see the softness it did in
its inkjet business. And, Hicks said, he believed the company was
correct in continuing aggressive price promotions on some product lines
– – promotions that he believes helps smaller solution providers such
as his company.”These 25-percent off MSPs (Manufacturer Suggested
Prices), 50-percent off a couple of targeted models – – that helps me
drive business,” Hicks said. “I can do marketing campaigns behind that
stuff..”
- You must be logged in to reply to this topic.