Feeds

Lexmark dumps inkjet arm, sacks 1,700

Estimates savings of $95m per year

Gartner critical capabilities for enterprise endpoint backup

Lexmark is to shut down its inkjet printing manufacturing and research operations, although it will continue to support and supply existing hardware and is keeping its laser printing division.

"Today's announcement represents difficult decisions, which are necessary to drive improved profitability and significant savings," said Paul Rooke, Lexmark chairman and chief executive officer, in a canned statement.

"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."

Staff on the laser printing side are safe for now. Lexmark's going to continue with laser in both stand-alone printing and multifunction devices for the enterprise sphere, where it can add in all sorts of extras and services to make deals more profitable.

But around 1,700 people, roughly 13 per cent of Lexmark's workforce, will lose their jobs in the move away from inkjets, which the company estimates will save it $85m next year and up to $95m per annum thereafter, although the restructuring will cost it $160m. It's also looking to sell off around 1,000 patents for inkjet technology to realize more funds.

The inkjet research and development arm will be shut by the end of next year and the company's printer manufacturing plant in the Philippines will close by 2015. This time lag will let Lexmark wring the last few drops of value out of its consumer business by selling consumables.

It has long been the case that manufacturers like Lexmark make little or no money from the hardware side of the business, while some toners are more seven times more expensive than vintage champagne. But Lexmark said the slim margins and increasing complexity of inkjets meant it was pulling the plug.

Lexmark's move comes as the general outlook for the inkjet market looks a little grim. In HP's recent financial results its printing and imaging division saw revenues fall 3 per cent – not too bad in a softish market but a clear sign that the inkjet market is less of a gravy train than once it was. Xerox and Canon have also downgraded sales forecasts.

Lexmark shares rallied strongly at the news, up 13 per cent on the day. This was in part due to the company spending $100m to buy back its own shares, and the board has OKed another $200m in purchases as they are needed. ®

The essential guide to IT transformation

More from The Register

next story
Assange™: Hey world, I'M STILL HERE, ignore that Snowden guy
Press conference: ME ME ME ME ME ME ME (cont'd pg 94)
Premier League wants to PURGE ALL FOOTIE GIFs from social media
Not paying Murdoch? You're gonna get a right LEGALLING - thanks to automated software
Caught red-handed: UK cops, PCSOs, specials behaving badly… on social media
No Mr Fuzz, don't ask a crime victim to be your pal on Facebook
Ballmer quits Microsoft board to spend more time with his b-balls
From Clippy to Clippers: Hi, I see you're running an NBA team now ...
Online tat bazaar eBay coughs to YET ANOTHER outage
Web-based flea market struck dumb by size and scale of fail
Amazon takes swipe at PayPal, Square with card reader for mobes
Etailer plans to undercut rivals with low transaction fee offer
Call of Duty daddy considers launching own movie studio
Activision Blizzard might like quality control of a CoD film
US regulators OK sale of IBM's x86 server biz to Lenovo
Now all that remains is for gov't offices to ban the boxes
prev story

Whitepapers

5 things you didn’t know about cloud backup
IT departments are embracing cloud backup, but there’s a lot you need to know before choosing a service provider. Learn all the critical things you need to know.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Build a business case: developing custom apps
Learn how to maximize the value of custom applications by accelerating and simplifying their development.
Rethinking backup and recovery in the modern data center
Combining intelligence, operational analytics, and automation to enable efficient, data-driven IT organizations using the HP ABR approach.
Next gen security for virtualised datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.