Lexmark Tries To Shed Cheap-Printer Image

In a Reuters news release

Lexmark International Inc said on Tuesday its first-quarter laser and inkjet printer sales declined and forecast further revenue softness, sending its shares down almost 12 percent.

The larger-than-expected 42 percent drop in inkjet printer sales .

Lexmark has responded to shrinking profits by shifting its consumer focus to higher-priced units and customers who print more.

Analyst Shannon Cross of Cross Research said the near-term profit growth that results from Lexmark's strategy of limiting sales of loss-making printers may be hard to sustain.
"It only works for so long, and then your installed base becomes too small and your supplies (sales) start to decline," she said.

Lexmark has been cutting costs and trimming prices in an effort to better compete with rivals such as Hewlett-Packard Co and Canon Inc. In October, it said it would consolidate operations in Mexico, including closing a plant and moving some 1,650 jobs to lower-cost countries.

The restructuring is expected to save $40 million this year.

However, concerns emerged on a conference call where analysts peppered Lexmark with questions about rising operating expenses, despite an ongoing efforts to cut costs, and possible lost business at electronics retailer Best Buy .

"Why does op-ex keep going up dramatically?," asked Sanford Bernstein analyst Toni Sacconaghi. "It's up 500 or 600 basis points above where it was historically. Now three quarters into the restructuring initiative, and you are calling for op-ex to be up even more again."

In response, Chief Executive Paul Curlander said more work must be done to develop new products that target high-volume users, who buy more ink and supplies. Also Lexmark increased hiring in its enterprise sales force.

"Obviously we didn't see all of the demand generation results from that, as we hit market weakness and segment weakness here in the enterprise space," he added. "But that's where the majority of the op-ex increase has been coming."

Total first-quarter revenue fell 7 percent, to $1.18 billion from $1.26 billion one year ago. Laser and inkjet printer revenue declined 18 percent.

Despite analysts' persistent questioning, Curlander declined to comment specifically on a report that the Lexington, Kentucky-based company's inkjet printers are no longer being sold in Best Buy stores nationwide. He noted that shrinking its line of low-end units has in the past resulted in a reduction of retail shelf space.

"I think it was a little more aggravated this time because the overall market is weak and the category is declining for retailers—they are dedicating less space to the category overall," Curlander told Reuters. "We (will) take the hit as we pull back ... but then we go back to work to get it back and get some more shelf space."

Curlander said he sees "good growth" in laser supplies and the potential for "continued erosion in inkjet and user demand."

For the second quarter, supplies revenue are expected to be about flat year to year as continued growth in laser supplies will be offset by a decline in inkjet supplies.

Moody's makes rating cut for Lexmark senior unsecured to 'Baa1'

Moody Announces Rating Change for Lexmark

Moody's Investors Service said it lowered the long-term senior unsecured rating of Lexmark International Inc (NYSE:LXK) to 'Baa1' from 'A3'.

$450 Million credit involved

The ratings lowered include the senior unsecured 150 mln usd note due May 2008 and senior unsecured 300 mln usd bank revolving credit facility maturing 2010.

Weaker Results significantly

Moody's said the downgrade reflects prospects for significantly weaker than expected operating results in the second and third fiscal quarters and the likelihood that ongoing pricing pressure throughout its laser and inkjet product offerings, a less robust installed base of inkjet units, a developing change by customers in using less profitable moderate use inkjet cartridges, and the need to increase product development and marketing spending will all contribute to weaker than historical results for Lexmark.

Lexmark's new ink cartridge program rewards customers with free cartridges

How it Works

Customers buy five ink cartridges from Lexmarkstore.com within a 12-month period, and they get one ink cartridge free.

In addition, after they return five empty Lexmark ink cartridges to Lexmark within a 12-month period, they can get a second ink cartridge free. You need to join into the Lexmark Rewards Program to receive the free cartridges.

Therefore, customers are eligible for two free cartridges for every five bought online and returned to Lexmark.

This program applies to almost all Lexmark branded inkjet cartridges(2).


FAQ

May I return eligible inkjet cartridges purchased any place other than LexmarkStore.com?

Yes. As long as it is a genuine, eligible Lexmark cartridge, it doesn't matter where you bought it—just return it in the personalized Lexmark Rewards return envelope (Note: Lexmark No. 2 and Lexmark No. 3 cartridges are not eligible).

Can I save even more ?

Save even more by purchasing Remanufactured Cartridge(s) and returning them to Lexmark under the program. We haven't found any reason why you couldn't return original remanufactured Lexmark cartridges under this program.

Buy from Metawatch Inkjet Supplies Now and Save more

10N0016 $21.75 CDN


10N0026 $23.05 CDN

12A1970 $21.95 CDN


Terms and Conditions

Epson strikes back as Ink Sales suffer

Epson strikes back at Calidad inks as Ink Sales suffer

"Tests show Calidad inks not suitable for printing photographs" screamed the headline from an Epson press release.Third party ink suppliers are estimated to be at approximately 30% of after market ink cartridge sales, printer manufacturers like Epson are waging a PR war against cut price competitors.

Razor Blade Model

As most consumers of inkjet printers probably know, printing manufacturers like Epson, Lexmark, HP, Canon that most inkjets now sold are more or less disposable products retailing at ridiculously low prices where they recoup their costs woth overpriced inkjet cartridges. Similar things are happening in the emerging color laser printer space.

3rd Part Inks Thrive

There is a healthy and growing market for third party ink suppliers which sell replacement ink cartridges significantly below the prices of OEM cartridges. This has the effect of eating into the after market ink sales of printing manufacturers and it also lengthens the printer replacement cycle as consumers will tend to keep printers longer if they can source reasonably priced ink refills.

Political Wars

Faced with a challenge to their business models by third party after market ink sales, OEM suppliers are becoming more aggressive in their anti-third party rhetoric.Epson warned against the use of third party inks in its printers with the release of "independent test results" which purport to show that one of Australia and New Zealand's best known third-party ink brands, Calidad, has one of the poorest results for print life ever measured.

Epson Claims

"The Calidad ink cartridges appear to contain low-stability dye-based substitutes for Epson high-stability DURABrite pigment inks. The Calidad inks have poor resistance to atmospheric ozone that may be present in homes and offices, and the Calidad inks also give up waterfastness when printed on plain paper," Mr Wilhelm said.

"When Epson users see these results they should be in no doubt that using third party inks in their Epson printers will lead to rapid fading and loss of their precious photographs," Epson's Marketing Communications Director, Mike Pleasants said.

"I am sure that no parents would want to give or receive as a gift a framed photograph of treasured children, friends or relatives, or that special occasion, that can suffer significant fading in less than a year," Pleasants said.

3rd Party Manufacturers fight back

Despite the claims from Epson, however, the third party market has hit back with its own report which refutes any suggestions that third party ink products are inferior to the more expensive OEM products.

A new survey by Lyra Research and published in Recharger Magazine revealed that

48% of respondents who had used non-OEM supplies said that they have never had a problem with a non-printer-brand cartridge.
6% have had many problems, defined as more than 10 percent of the time, and
44% have had “just a few problems,” defined as less than 10% of the time.

Overall, 93% of color laser printer users and 92% of color inkjet users said they either have had no problems with aftermarket cartridges or have had “just a few” problems, according to the survey.

Printing goes Wireless at Lexmark

Lexmark makes wireless printing AIOs

Lexmark is launching a new range of printers in the UK, with a new selection of wireless printers .

'The company previewed the products at its Global Press Event in Kentucky, with Jeff Willard, vice president and general manager at Lexmark, and Jeff Meredith, director of product marketing, claiming the company’s new range will help consumers increase productivity.


Less than $100

The Lexmark execs said there’s been a surge in the number of homes with an all in one in recent years, largely due to increased affordability. Lexmark sees itself as central in driving this growth, having introduced the sub-$100 colour inkjet in the US in 1997 and sub-$200 all-in-one in 2001.

Wireless represents the Driving Technology

But wireless networking is expected to be one of the top drivers of productivity over the next five years, according to results of Lexmark’s 2007 Wireless and Printing survey. The company said printing has evolved, but wireless printers have previously been too expensive and complicated. In 2007, however, Lexmark predicts this will change.

“Wireless is the next big thing in inkjet printing and we will be providing easy-to-use and affordable wireless printers,” said Willard. “Lexmark will drive the explosive growth in the printing category and give customers access to something they previously couldn’t afford.”

Third Party Inkjet Cartridge Product Reliability and Warranty

Satisfaction Guarantee
Most third party products offer expiry dates of 3 years from the date of manufacture. Longer than many people keep their printers. Although most Third Party manufacturers only offer 30-90 days of satisfaction guarantee it is not because they experience a higher failure rate thereafter but simply so that they do not have to keep inordanite amounts of funds reserved for futre potential claims.

Warranty

Most companies set aside x # of $ for warranty purposes and in effect it would not make sense for them to carry forward multiple years of sales percentages for the product. Our statistics shows less than 1 in x thousands of cartridges fails, and most of these failures are attributable to user related or printer equipment problems. Similarily 30-90 days is sufficient to allow for new clients to properly evaluate their satisfaction levels with the product.

We have never refused a warranty claim for any failed product in the company history for any reason (attributable to the product, or delivery) regardless of date. I am sure not all companies can attest to that claim.

Note: We review our suppliers and track failure rates extensively. We routinely test products from various manufacturers and select only those products offering the highest overall reiliability.

Not all inkjet Cartridges are made the same
Some 3rd party manufacturers have lesser quality ink formulas that can dry out resulting in clogged heads and premature replacement of inkjet cartridges. (See our earlier article on Npyrol). Similarily, the manufacture of the cartridge itself will determine its fit within the printer and its overall seal. Thirdly many cartridges are refillable by using a cartridge resetter. Not all Third Party manufacturers use chips that support being reset.How can you as the end user determine who makes the best inkjet cartridge?

Check out Newsgroups
Customer Feedback Sites
Research how inkjet products work so that you understand what you are buying
The length of time the company has been in business
Feedback from friends

Manufacturers Warranty
No inkjet manufacturer will void their warrany for their printer simply because you use 3rd party inkjet products (Its illegal)

What products have the highest failure rates
Something that none of the inkjet manufactures will ever tell you or publish you can find out here.

Worst

The 3rd party market for Lexmark Remanufactured cartridges definately offers the lowest reliability. As Dell uses Lexmark manufactured products (To their Specification) we'll let you decide where they stand.

Better

HP has a well established market and proven technology. We'll give them a passing grade and you can be confident with the industries re-manufactured products. Again not all remanufactured products are put through the same testing /cleaning prior to being refilled so beware of extreemenly low cost, or fly by night companies.

Best

Canon and Epson compatible cartridges are by far the best overall third party products on the market. Due to their simpler design (No Heads) there is less to fail. They are the overall winner in any customer satisfaction survey, and we wouldn't hesitate to promote them to anyone.