*NEWS*DELL’MAIN DRIVER"OF LEXMARKS GROWTH

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*NEWS*DELL’MAIN DRIVER"OF LEXMARKS GROWTH

 user 2005-02-02 at 9:48:00 am Views: 105
  • #10020

     Dell Remains ‘Main Driver’ Of Lexmark’s Growth

    Goldman Sachs said Dell remains “the main driver” of growth at Lexmark International  contributing an estimated two-thirds of Lexmark’s 8% year-over-year growth in the fourth quarter. Goldman said, “Dell’s contribution to Lexmark’s total revenue continues to grow, accounting for just below 11% in the December quarter versus 10% in the September quarter and 8.8% for full-year 2004. At the same time, Dell continues to have an outsized impact on Lexmark’s top-line growth, contributing 66% of total printer and supplies growth in the December quarter and over 50% for the full year.” The research firm said that while Dell’s contribution to Lexmark’s inkjet printer growth “should drop somewhat in 2005 as the comparisons become more difficult, a stronger push with low-end monochrome lasers by Dell should keep the impact to Lexmark’s overall growth between 45% and 50%.” Goldman expects Lexmark to earn $1.18 per share on revenue of $1.48 billion when it reports fourth-quarter earnings on Jan. 24. “While we don’t expect the stock’s longer-term overhangs relating to Dell’s impact on the industry’s business model to disappear, a better performance in the consumables space will go a long way towards resolving shorter-term concerns, enabling the shares to begin to move back towards the higher end of their valuation range,” Goldman said. Despite comments from Hewlett-Packard about more-aggressive pricing, the firm said its checks suggest that the competitive environment “remains relatively stable.” Goldman said, “While HP could still take a more-aggressive stance with hardware pricing before the end of its January quarter, this wouldn’t have an impact on Lexmark’s fourth quarter and seems more unlikely now that the holiday rush has passed.”