Lexmark dropped because the company predicted lower earnings in the next quarter.
Well you got that one correct.
Lexmark derives virtually its entire income from what has become a commodity business.
And that one wrong. There are plenty of developments going on in printers including color, all in one fax/scanner/printers, and a very limited number of companies (HPQ, LXK, Epson, Canon, Brother) that can make both inkjet and laser printers. There are less companies worldwide that can make a full range of printers than there are in handsets (NOK, MOT, Samsung, LG, NEC, Sony-Ericson, etc. etc.).
While it makes money on replacement ink cartridges designed for its own printers, it doesn't really have any price or performance advantages over its competitors.
The performance point is arguable, but the industry is non-competitive enough that all the printer makers are highly profitable. You don't want to be in a hardware industry where your only edge is price, because price doesn't last. If LXK's advantages are so weak, how do you explain their 12% operating margin?
Furthermore, one of the major changes in its business has come from the Compaq HP merger, since before the merger, Lexmark was a major customer for Compaq.
Compaq was 2%-3% of LXK's business, and since the merger LXK has won Dell as an OEM.
Anyway, wrong thread for this stuff, but lets not hear so much printer industry bashing!
Elroy |
