Lexmark ends inkjet printers as 1,700 jobs go
LEXMARK International, the US printer maker, has said it is to stop making inkjet printers and cut about 1,700 jobs, or around 13 per cent of its workforce.
The move, which is expected to result in annual savings of $95 million, comes as Lexmark faces falling demand for its consumer-oriented inkjet printers. Revenues at the inkjet printer business fell 66 per cent in the first half of this year, forcing the company to cut its full-year forecasts last month.
The company had already cut 625 employees in its consumer supplies manufacturing business earlier this year.
Lexmark, which plans to focus on selling more sophisticated laser printers and software, said it was exploring the sale of its inkjet technologies. It will also close its plant in Cebu in the Philippines by 2015. About 1,100 of the jobs being eliminated are in manufacturing.
Lexmark is one of a number of printer companies struggling with declining demand. Xerox and Canon both cut their profit forecasts in July, citing concerns about tightening European consumer spending. HP reported a 23 per cent drop in printer sales last week.
Lexmark has been diversifying from basic printer equipment with a number of acquisitions, including the purchase of Perceptive Software, which provides workflow and document management software, in 2010. The company bought Brainware, Isys and Nolij earlier this year to bolster the Perceptive Software unit.
“Today’s announcement represents difficult decisions, which are necessary to drive improved profitability and significant savings,” said Paul Rooke, Lexmark chairman and chief executive officer.
“Our investments are focused on higher value imaging and software solutions, and we believe the synergies between imaging and the emerging software elements of our business will continue to drive growth across the organisation.”
Lexmark, which employees about 13,300 people, said it would take a pre-tax charge of $160 million related to the restructuring, with $110 million of this falling into the current financial year.
The company said it would buy back $100 million worth of shares in the second half of the year, in line with its aim of returning 50 per cent of its free cash flows to shareholders. – Copyright The Financial Times Limited 2012