In a 2D-printing market that is so competitive, even the giants are failing to keep up revenues. That competition makes operations difficult in an industry that demands massive resources to ensure product lines are current.
Lexmark International Inc (NYSE:LXK) specializes in developing, manufacturing and supplying imaging, as well as providing printing, print services, device management, documenting workflow, and business content management solutions and business process.
Shareholders would be doing themselves a favor by staying away from this company. The firm is experiencing years of painful sales that are likely to continue because of the company’s soft command of other market segments. Irrational pricing of inkjet printers that began around the turn of the century, caused the firm’s revenue to fall significantly to the point where Lexmark International Inc (NYSE:LXK) is exiting that market segment. Low-end printers have deteriorated to the point where they aren’t profitable, and the devices don’t consume enough ink to facilitate enough profits from ink sales. Lexmark International Inc (NYSE:LXK)’s inability to diversify into growth sectors spells continued trouble for the firm.
The company’s revenue continues to fall, dropping by 10% year-over-year in 2012. Net profit suffered an even worse plunge, falling over 200%. That looks to worsen this year and next, as revenue is expected to fall another 8% in 2013 and 6% next year. This business needs to turn things around fast, but rivals Hewlett-Packard Company (NYSE:HPQ) and Xerox Corporation (NYSE:XRX) look to have a slightly better handle on things.
Hewlett-Packard Company (NYSE:HPQ) is more diversified, but still lacks in key areas
Hewlett-Packard Company (NYSE:HPQ) is a well-diversified company that offers printing capabilities, enterprise servers, storage and networking, software, financial services, corporate investment and personal systems. In focusing on the printing and computer segment, which accounts for the lion’s share (40%) of the company’s operating income and about half of the revenue, the firm is a leader. While the printing segment will likely grow, due to Lexmark International Inc (NYSE:LXK) pulling out of the segment, I see the PC sales decreasing as people continue to choose tablets.
The balance sheet and estimates support that theory. The company experienced a loss last year, but it underwent about $2.2 billion in restructuring costs. With that large investment, the company is poised to stabilize its balance sheet. However, revenue also decreased by about 6%, and analysts expect a further 7.4% plunge this year and another 2.2% after that.
