Generic cartridges leave mark on Lexmark profits

The printer maker has seen a slowdown in revenue growth as consumers vote with their feet and buy cheaper ink cartridges from other suppliers
Written by Ingrid Marson, Contributor

US printer manufacturer Lexmark said on Tuesday that third-party printer cartridges are impacting its sales figures.

Customers are increasingly buying lower-priced 'generic' ink cartridges, which has reduced Lexmark's profits and revenue growth, according to the Financial Times. Lexmark reported a first-quarter operating profit of $161.7m (£84.94m) from revenues of $1.358 billion. This represents a first-quarter revenue increase of eight percent from 2004 to 2005, compared with an increase of 13 percent from 2003 to 2004.

The issue of third-party vendors selling printer cartridges is one that affects all printer manufacturers. Last month, printer manufacturer HP sued two companies that sell refilled ink cartridges.

It alleged that one of the companies, InkCycle, violated three HP patents with its ink. It accused the other company, RhinoTek, of false advertising by using packaging that indicated did not indicate that its refilled HP printer cartridges were recycled.

Last year Lexmark lost a legal battle over cartridge refills. The company alleged in 2003 that Static Control Components had violated the Digital Millennium Copyright Act (DMCA) by selling its Smartek chips to companies that refill toner cartridges and undercut Lexmark's prices. But, in October 2004, a US federal court ruled that Static Control can continue selling the chip, as the DMCA allows exemptions for the purpose of interoperability.

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