Lexmark today announced it would retreat from the inkjet printer business to focus on laser printers, document imaging software and document management services. The US based firm will stop inkjet development and close its inkjet supplies factory in the Philippines by 2015. Since the inkjet printing business has neither been a strength of the company nor a money spinner shares in Lexmark jumped by as much as 20 per cent following the news announcement.
In addition to cutting the 1,700 workers (13 per cent of entire Lexmark workforce), who staff the inkjet printer making facilities in the Philippines, Lexmark has about 1,000 inkjet related patents to sell. The decision is expected to save the company $95 million per annum. Meanwhile other inkjet printer makers are experiencing difficulty trying to make money from the business including HP, Canon and Xerox.
The touchscreen Lexmark Genesis inkjet all-in-one.
Printer sales seem to be struggling at the moment as people seem to print less and store, transfer and share more documents and pictures electronically. In the first half of 2012 Lexmark’s inkjet printer revenues fell a dramatic 66 per cent. Simultaneously laser printer prices have dropped which traditionally are less expensive to run for users who like to print a lot. However lasers and inkjets both have their strengths and weaknesses.
Paul Rooke, Lexmark chairman and CEO said “Today’s announcement represents difficult decisions, which are necessary to drive improved profitability and significant savings. Our investments are focused on higher value imaging and software solutions, and we believe the synergies between imaging and the emerging software elements of our business will continue to drive growth across the organization.”
The move out of the inkjet printer market isn’t a decision without consequences as the restructuring of the company will cost an estimated $160 million. Mr Rooke said that the news will not affect the previously announced $100 million share buyback, due to take place in Q3 and Q4 this year and that “As we move forward, we remain confident in our strategy, competitiveness and ability to create value for shareholders.” For consumers worried about support of their current Lexmark inkjet hardware the company said in a statement that “Lexmark will continue to provide service, support and aftermarket supplies for its inkjet installed base.”
