Development will be discontinued by the end of next year, and production of consumables such as ink cartridges will cease at the end of 2015. It was not an easy decision, but a necessary one, explained lexmark chief executive paul rooke on tuesday. The company had already decided to exit the inkjet business with private customers, but now it is also discontinuing business customer machines. Lexmark promised customers, however, to ensure service and ink supply.
For years, there has been a fierce price war for inkjet machines. Many manufacturers earn only on the ink. In addition, demand for printers is slowing down. Hewlett-packard, a major rival, recently had to report a real slump: it sold 23 percent fewer printers in the quarter than in the same period the previous year. Private customers in particular are holding back.
Lexmark now focuses primarily on laser printers and solutions for business customers such as software. The share of total sales accounted for by inkjet printers and accessories was recently still around one-fifth, and the trend is down sharply. The group currently manufactures consumables in a factory in the philippines. The closure will eliminate 1100 production jobs alone.
Lexmark is one of the cornerstones of the IT industry. In the first half of the year, sales had shrunk by 8 percent to 1.9 billion dollars (1.5 billion euros). Profit nearly cut in half to $100 million. Lexmark expects further declines in the current quarter.
The phase-out of inkjet printers is expected to ultimately save $95 million a year. On the other hand, there is a one-time charge of 160 million dollars before taxes for the closure.