Lexmark leaves Inkjet Business Now What?
Lexmark today announced it is exiting the inkjet business to pursue high-value units and software solutions. The surprise move has the company closing down a plant in the Philippines and laying off a total of 1,700 workers.
The company, which has lost almost 40% of its value on the stock market over the last year, has stated it will continue to support its current line of inkjet printers but did not state for how long.
Lexmark is hoping to save $85-$95M with the shutdown and layoffs and hopes to sell off its inkjet technologies. With a recent acquisition of a number of software companies the company will focus on software solution and high-end laser hardware.
Lexmark in the consumer space has been known as the lower price alternative to HP, Canon, and Epson but has not had the adoption the competition has had in that space. A restructuring was necessary but I would expect more layoffs in the future. The company had announced in January 625 layoffs, which would bring the total with the current announcement to 1,325.
The plant closure in the Philippines will feel the brunt of the layoffs with 1,100 coming from manufacturing jobs. The plant is to be completely phased out by 2015 and the restructuring is expected to cost the company $160M.
It will be interesting to see if Lexmark can sustain as a company, exiting the market on a brand it has built through consumers. Though focusing on business makes good sense as most of the consumer based printer manufacturers have had to modify their business plans over the years to make money on ink and supplies, rather than on devices.