Aug. 28, 2012 (12:30 pm) By: Matthew Humphries
Yesterday Sony announced that it was closing down its optical drive manufacturing facilities due to increased competition meaning Optiarc was operating at a loss. A day later and Lexmark is sighting similar reasons for its decision to exit the inkjet printer business.
Lexmark has announced that all inkjet printer research and development as well as manufacturing will be shut down over the next 3 years. That will result in the company’s Cebu, Philippines manufacturing facility being closed by the end of 2015 with the loss of 1,100 jobs. In total Lexmark will be cutting 1,700 jobs (it currently employs around 13,000 people worldwide).
The reason for this decision is the thin margins that inkjet printers sell for combined with a need for the company to save some money. Lexmark believes exiting the inkjet printer market will save them $85 million next year, rising to $95 million from 2015. The next step is buying back shares and offering dividends to shareholders.
Other printer manufacturers will no doubt be pleased to see the Lexmark name disappear as a competitor, but will also be keen to pick up any inkjet related patents and technology Lexmark decides to sell off. Lexmark may choose to license its tech in order to create new revenue streams, though.
As for the future, Lexmark intends to concentrate on its solutions, imaging, and software businesses. Anyone concerned about being able to get supplies, support, and service for their existing Lexmark inkjet products can relax. Lexmark fully intends to keep offering such services going forward.