LEXMARK SAYS INKJETS ARE STILL GOOD BUSS

[Anonymous]

Lexmark says low-end inkjets are still good business
As Lexmark International withdraws from a significant portion of its low-end inkjet printer business, it’s important to note the market is still a good one for the company, its chief executive stressed to analysts and investors this morning.CEO Paul Curlander addressed that and a variety of topics at the Sanford C. Bernstein and Co. Strategic Decisions Conference in New York City.The inkjet discussion stemmed from the company’s announcement earlier this year that it would withdraw from about 20 percent of its inkjet sales, a group that includes a number of bundling agreements.The company called some of those agreements bad deals, as consumers do not buy enough inkjet cartridges and supplies over the products’ lifetimes to offset low profit margins on the initial piece of hardware.A question posed to Curlander asked whether the company would essentially be competing even more intensely with higher-priced inkjets, such as Hewlett-Packard’s offerings, by walking away from some of the low-end inkjet business.“I think obviously we’d like to be stronger in the above-$100 segment,” Curlander said. “But I would tell you that the below-$100 segment is not a bad place to be.”Curlander also reiterated that Lexmark is focusing on introducing new products in high-growth market segments where the company is underrepresented, such as color lasers and 4-in-1 inkjets.He added the company’s focus is on raising hardware unit growth, then increasing hardware revenue growth and supplies growth.“It’s going to have to be a progression starting with unit growth for us to move back where we really want to be,” he said.Curlander also said the company is still executing its restructuring program announced earlier this year and “we haven’t focused on doing more restructuring than what we’ve already announced.”In January, the company announced a plan that would eliminate or transfer 1,350 jobs, including up to 200 in Lexington, to countries where wages are lower. Lexmark also announced it would freeze its U.S. pension plan and begin offering improved 401(k) matching contributions.“That’s what we thought was the right amount to do … beyond that we’re looking for our investments to grow the business,” he said. 

[Author]

June 2, 2006 at 11:54 AM