Lexmark's Quarterly Results Reflect Anemic Demand For Printers

[news]

Lexmark's Quarterly Results Reflect Anemic Demand For Printers
 by Trefis Team

Weak Demand For Laser Printer And Supplies Impacts Revenues

Laser printer and cartridge division is its biggest business unit and makes up 82% of Lexmark’s estimated value. According to IDC, the worldwide hardcopy peripherals market declined 1.16% in 2014. ^[1]

It seems this trend continued in Q1 as well as Lexmark posted weak demand for its laser printers and supplies. While laser printer hardware revenues declined by 9% year over year (4% in constant currency) to $152 million, supplies revenue (including the inkjet business) declined by 6% to $568 million. MPS, which has been the key contributor to laser revenue growth, was instrumental in boosting laser supplies revenue that grew by 9% in constant currency (2.26% decline in dollar terms). Going forward, we believe that MPS integrated with Perceptive’s solutions will deliver value to Lexmark’s growing client base. Annuity service contracts tend to be sticky, and MPS is a high margin business compared to selling hardware. We expect it to become the biggest driver for Lexmark going forward.

Managed print services (MPS) revenue grew by 3% year over year to $185 million; non-MPS revenue declined by 6% t0 $533 million and inkjet revenue declined by 34% to $48 million. Additionally, Lexmark’s Perceptive software division continued to post growth as revenues grew by 40% to $90 million.

Lexmark's Quarterly Results Reflect Anemic Demand For Printers
 by Trefis Team

Weak Demand For Laser Printer And Supplies Impacts Revenues

Laser printer and cartridge division is its biggest business unit and makes up 82% of Lexmark’s estimated value. According to IDC, the worldwide hardcopy peripherals market declined 1.16% in 2014. ^[1]

It seems this trend continued in Q1 as well as Lexmark posted weak demand for its laser printers and supplies. While laser printer hardware revenues declined by 9% year over year (4% in constant currency) to $152 million, supplies revenue (including the inkjet business) declined by 6% to $568 million. MPS, which has been the key contributor to laser revenue growth, was instrumental in boosting laser supplies revenue that grew by 9% in constant currency (2.26% decline in dollar terms). Going forward, we believe that MPS integrated with Perceptive’s solutions will deliver value to Lexmark’s growing client base. Annuity service contracts tend to be sticky, and MPS is a high margin business compared to selling hardware. We expect it to become the biggest driver for Lexmark going forward.

Managed print services (MPS) revenue grew by 3% year over year to $185 million; non-MPS revenue declined by 6% t0 $533 million and inkjet revenue declined by 34% to $48 million. Additionally, Lexmark’s Perceptive software division continued to post growth as revenues grew by 40% to $90 million.

[Author]

May 5, 2015 at 10:49 AM