REMEMBER LEXMARK ?
REMEMBER LEXMARK ?
2009-09-11 at 12:27:12 pm #22445
In this era of Kindle books, text messages and Facebook photos, printed information is taking it on the chin – and perhaps no company has been hit harder than Lexmark. The Kentucky-based printer company is one of the worst performing stocks in the hardware sector this year, down about 30%.But Lexmark (LXK) CEO Paul Curlander hopes a new line of printers will help him climb off the canvas.The eight new machines for small and medium-sized businesses, which Lexmark is launching today, sport eco-friendly features designed to conserve paper and ink. Some have touchscreens. And they should get more attention than usual, thanks to expanded distribution deals Lexmark signed earlier this year with retailers like Staples (SPLS), Office Depot (ODP) and OfficeMax (OMX).“We’re trying to make inkjet a bigger piece of the business market,” Curlander tells Fortune. “We want to move down from the enterprise space into small and medium business, and get device prices down into the $199 to $399 range.”
Even with these fresh products, Curlander is in for a bruising battle. Last year Lexmark’s nemesis, printing giant Hewlett-Packard (HPQ), shipped about six times more inkjet printers, and nine times more laser printers.Under the unique economics of the printing business, that size difference can be particularly significant. Companies like HP and Lexmark often sell printers at a loss, expecting to make profits later from sales of ink and toner.
So Lexmark’s market share disadvantage hurts more than just its pride; lower volumes make it tougher for the company to keep costs low on money-losing hardware, and to later milk those customers for profitable ink sales.In part because of those economics, Lexmark’s business has suffered over the past few years. Sales shrank from $5.1 billion in 2006 to $4.5 billion in 2008, and its share has continued to slip this year; industry leader HP’s sales rose from $26.8 billion to $29.4 billion over a similar period.Now Lexmark has a comeback strategy that’s focused not on the low-end consumer market but on businesses, who are likely to buy color laser printers and multi-function inkjets that fax and copy as well as print. Those customers, the thinking goes, are more likely to bring in healthy ink sales down the road.
Most on Wall Street are not convinced that Lexmark’s strategy will work. Bank of America has an underperform rating on the stock, saying it’s too soon to tell whether Lexmark’s strategy has legs. Deutsche Bank has a hold, saying it’s skeptical that Lexmark can grab market share without simply slashing prices.Still, Curlander sounds upbeat. The company has survived thus far by cutting expenses in proportion to declining revenues, and it has held on to niche customers like pharmacies and bank branches, where its printers are popular.
Now Curlander is talking up Lexmark’s push into managed print services, industry lingo for consulting on how businesses can get their printing done with less waste and less money.He waves off the observation that Lexmark isn’t alone on the services bandwagon; HP and Xerox (XRX) are saying many of the same things about helping customers print less. “We’re actually doing it,” he says. “I’m not convinced they are.”One of the things Lexmark does have going for it, ironically, is that investors have punished the stock rather mercilessly of late – enough that a few investors are banking on a rebound. Among the Lexmark bulls is respected Bernstein Research analyst A.M. Sacconaghi, who has an outperform rating on the stock.
His bullish case: Lexmark’s sales have actually held up pretty well considering the overall doldrums in the printing market, which Sacconaghi believes are due more to the battered global economy than to an Internet-fueled decline in printing.Lexmark’s failure to hedge against currency fluctuations makes its cash flows look worse than they are. Its laser business is healthy. And in early August, Lexmark stock was at $16.70 – so cheap that investors were valuing its still-sizable inkjet business at basically zero.Others might be starting to come around on Lexmark; the stock is up 13% since Sacconaghi made that case in a note last month. Even so, Sacconaghi has a lofty price target of $25 on the stock – which means if Curlander wants to prove his supporters right, these new printers had better be good.
Cellnet cuts ties with remaining IT vendors(australia)
News follows distributor’s decision to offload its IBM business to Avnet
Cellnet is terminating its remaining IT relationships and will wind up the division this month. The news comes after the ASX-listed distributor sold its IBM business to Avnet.Samsung printers channel manager, Greg Wallis, confirmed its printer relationship with Cellnet would end on July 1. He said the distributor had been a strategic distribution partner but wouldn’t have a material impact on its business.
Lexmark channel and SMB manager, Stephen Bell, also confirmed the printing vendor would not be working with Cellnet going forward. It will now evaluate whether it needs to find a replacement supplier to take up where Cellnet left off.General manager for UPS vendor Eaton Power Quality, Michael Mallia, expressed surprise at the developments and said it had been undergoing joint training with Cellnet in recent weeks.“To be honest, I am not exactly sure where we stand as to whether the Avnet guys will take our business across,” he said. “We haven’t had a chance to talk to them but we have already had calls from Avnet people to sell UPS anyway. But it is all up in the air right now.”Asus CEO, Ted Chen, also confirmed the vendor did not expect to continue its relationship with Cellnet, but would leverage its existing relationships with other partners, including Avnet.The news follows Cellnet’s decision to offload its IBM business to rival player, Avnet.
Lexmark finds Cellnet replacement
New distie, Dynamic Supplies, aims to bring on more IT resellers
Printing vendor, Lexmark, has brought on tech distributor, Dynamic Supplies, as its replacement for Cellnet.Cellnet cut its ties with Lexmark in late June as part of its winding up Australian IT operations.Dynamic Supplies was originally a Lexmark distributor of toner and ink products, but will expand its range to include the vendor’s hardware range.Lexmark channel and SMB manager, Stephen Bell, said the strategic move allowed the vendor to use Dynamic Supplies’ targeted resellers while boosting Lexmark’s geographical coverage and support.“They will get us into parts of the market where we haven’t had as high a penetration as we would have liked. They give us some additional reach into SMB, which is an area that’s growing really strongly for us,” Bell said. “There’s probably increased support for WA and Queensland.”
He said the vendor’s existing distributor relationships strongly influenced the eventual choice.“Because of the fact that we’ve got really good relationships with both Ingram Micro and Altech, which are our other two hardware distributors, we didn’t want to make a decision where we just cut the pie up. And by virtue of Dynamics sort of getting us into a new market space we have the ability to grow by making this decision.”
But both Bell and Dynamic Supplies’ managing director, Scott McLennan, agreed there would be no limitation on the type of reseller Dynamic Supplies sells to.“We’re certainly replacing Cellnet, but Cellnet did have a distinctly different customer base so that’s an opportunity for us to expand our reseller base into what I would probably term the ‘IT reseller’,” McLennan said.“Our traditional customer base, which is a fairly strong one that buys a lot of hardware, is what we call a ‘stationary reseller’.”Although McLennan confirmed there was going to be an increase in joint marketing funds, he said the distie was looking at a soft marketing approach.“There’ll be some marketing promotional programs we will launch with, but they’ll probably come out in the next two to three weeks,” he said.
While the distie has high hopes for the new partnership, he had not worked out an exact expectation of revenue growth, McLennan said.“We’ve got high expectations but we’re not going to force ourselves into a number. We’re looking at fairly strong incremental growth. We’ve got big plans,” he said.“We have a fairly large business in the consumable space so it would be a fairly small percentage increase for us but I would say it’s a fairly large percentage increase for our existing hardware business.”