XEROX & LEXMARK OEM SALES SHOW WEAKNESS

[Anonymous]

For Xerox and Lexmark, OEM Sales Show Weakness
The days when executives of major printer manufacturers look at huge OEM deals with dollar signs in their eyes may be waning.
Lexmark
and Xerox, rivals in the document technology space, both reported to
financial analysts this week that sales of products they manufacture
for other vendors continue to be weak, while sales through the channel
of their own, branded products continue to show strength.Anne Mulcahy,
Xerox’ chairman and chief executive, told analysts in a conference call
after the company posted earnings this week:We continue to see a
slowdown in sales of desktop color printers, primarily in our OEM
products, but Xerox-branded printers were stronger this quarter.And:The
pace of growth in color printers, primarily from OEMs, did slow this
quarter, with color printers down 6%.And:On the environment, I’d put
the most competitive part of the environment, it continues to be the
very low end of color printers. We’re seeing that in terms of the
pressure on our OEM partners, in terms of some of that performance,
although we were really pleased with our own branded activity, which
was up 13% this quarter. Our branded color printers are also at the
high end of the product range, which drive more pages. So given our
druthers, our preference would be to have a more significant
performance in the branded printers.Lexmark found itself in a similar
situation in its third quarter. Its Chairman and CEO Paul Curlander
told financial analysts on a conference call after Lexmark earnings
were posted:All i can tell you is that for this quarter. . . on a year
to date basis, OEM sales are down in both the laser and the inkjet
business. It’s kind of hard to predict going forward. But no question,
we’ve seen a weak year in OEM sales.Both Lexmark and Xerox (including
through its Fuji Xerox joint venture) are OEMs for Dell – which has
been reporting its own significantly slowing growth and a drop in
profitability. Lexmark has listed Dell as one of its biggest customers.
At the same time, both Lexmark and Xerox are reporting growth and
strength in their branded businesses.

[Author]

October 30, 2006 at 10:21 AM