Lexmark to exit inkjet printers, cut 1,700 jobs

Lexmark to exit inkjet printers, cut 1,700 jobs

Summary: Lexmark will close an inkjet manufacturing facility in the Philippines and cease development as it eyes high-end imaging.

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Lexmark on Tuesday said it will exit its inkjet printer business and cut 1,700 jobs around the world in a move to save roughly $95 million annually.

The company, a former spin-off from IBM, is stuck in a cut-throat inkjet printer market that features HP and Canon as No. 1 and No. 2 respectively.

Lexmark said that it will provide supplies, service and support to its inkjet installed base. The move allows Lexmark to focus on high-value imaging and software, the company said in a statement.

lexmarkinkjet

Specifically, Lexmark said it will cut jobs related to inkjet manufacturing, development and support. The company will close its Cebu, Philippines manufacturing facility by the end of 2015. That closure will eliminate 1,100 manufacturing jobs. Another 600 jobs will be lost as inkjet development is terminated by the end of 2013.

Lexmark added that it is also looking into a sale of its inkjet technology.

For shareholders, Lexmark said it will begin a plan to buy back $100 million in shares through the third and fourth quarters of 2012.

The company indicated that it will take a $160 million pre-tax hit for the restructuring with $110 million incurred in 2012.

Lexmark CEO Paul Rooke made the following points on a conference call:

  • The company is focusing on its Perceptive Software unit, which will deliver an operating profit in 2013.
  • Lexmark will focus on business workgroup multifunction printers and fleet management.
  • New inkjet platforms just weren't enough to offset aggressive pricing. Analysts estimate that HP sells printers at a loss to sell ink supplies. 

Rooke added:

So why now? First of all, while the business acceptance of the products and ink usage has improved with our latest business inkjet platforms, we concluded it wasn't going to be enough to overcome the aggressive market pricing and future investment required to require a sustainable acceptable return on invested capital for the future. Let me be clear. While we were exiting inkjet, we were not exiting the business color market. Which brings me to the second point. We are continuing to advance the performance of our color laser technology, and are confident the new advances we have planned will be competitive with other color lasers as well as expected future business inkjet advancements. We believe these advancements will enable lasers to maintain their status as a preferred technology for higher-usage, business color workgroup devices, and a key focus of ours. And third, we are moving from a hardware-centric to a solutions company. An added benefit of this decision is that it will help accelerate the move as we redeploy some resources towards advancing this shift.

Topics: Hardware, Printers, Tech Industry

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7 comments
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  • They made some real crap

    Given the fact that I owned both a Lexmark and a Dell printer in my life both of which were Lexmark gems. I am not sad to see them go. I dropped on of them off my roof after it failed to print one day just when I needed it.
    jscott418-22447200638980614791982928182376
    • Real crap indeed

      You are absolutely correct. Lexmark inkjets were crap and the consumables were overpriced.
      Thank GOD for small favors.
      bajan5026@...
    • Your experience definitely differs

      Of the 3 printers I've used at home (1 Canon, 2 Lexmark), the Lexmark models have been far better than the Canon model.

      As far as cost, the only time I've seen Lexmark ink become too costly is when the printer I'm buying it for has lagged far behind the "current" offerings. And before you blame the company... the equivalent to a printer company supporting a 7-year-old printer with "cheap" ink would be Ford manufacturing "affordable" replacement engine parts for a 1960s Mustang, or Chrysler continuing to manufacture replacement parts for a 1987 Dodge Aries: the volume in any of those markets is too low for the company to benefit from any sort of "bulk production cost reduction".
      spdragoo@...
      • They can support ink for old printers.

        I'm using the same HP inkjet I bought in the late 1990's. The ink cartridge cost seems to be in line with cartridges for other HP inkjets.
        ssc1478@...
      • HP is number one because they're cheap (price)

        And they also are cheap in quality terms.

        I had a Lexmark years ago, and it was one of the best printers I had. I bought it to replace an old Panasonic laser (4ppm, black only). But then the all-in-ones came out, and I ended up with an HP. Which wasn't a terrible printer, but it was horrid as an all-in-one, especially as a networked device. Then a lightning storm managed to take it out, despite the surge protection. Somehow the EMP, jumped past the MOVs. Anyway, replaced that one with another HP that was even worse. And now have a new Lexmark all-in-one that is hands-down one of the best network printers I've ever used. The old HPs couldn't scan to a network computer - the printer HAD to be hooked directly to the PC - but this Lexmark asks me which of the several computers I want the page scanned to. It has no problems printing/scanning from the network, copy/fax functions work well too. Plus, the black ink is only $5.00 a cartridge. (Sometimes, you can find the 4-pack for around $16/$17, making it a little over $4.00/ea.)
        reziol
      • I agree with you spdragoo,

        our current Lexmark printer, from early 2009, that's wireless cost around $50.00 new. it's still printing out whatever we throw at it. So I'll be sad to see them stop making these printers, but feel bad for the people losing their jobs also....
        T-Wrench
  • Back to bite them...

    This is the company that led the charge against 3rd-party cartridge (think RIAA for ink cartridges) and refillers. Serves them
    right. When will companies learn that gouging customers and suing the world is
    not a successful strategy to win in the marketplace. Oh wait...that's worked for Apple.

    Win by innovating - at least Apple gets that part right often.
    sjobs84