Lexmark to Quit Inkjet Printer Business

Lexmark Plans to Sell Inkjet Technologies

by Anton Shilov
08/28/2012 | 11:15 PM

Lexmark International has announced restructuring actions, including the exiting of the development and manufacturing of the company's remaining inkjet hardware, which are expected to result in annualized savings of $95 million once fully implemented. Lexmark will continue to provide service, support and aftermarket supplies for its inkjet installed base. The company is exploring to sell its inkjet technologies.

 

"Today's announcement represents difficult decisions, which are necessary to drive improved profitability and significant savings. 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 organization," said Paul Rooke, Lexmark chairman and chief executive officer of Lexmark.

The restructuring actions announced today are expected to result in reductions primarily in inkjet-related infrastructure as well as positions in research and development, supply chain and other support functions. The actions include closing the Cebu, Philippines, inkjet supplies manufacturing facility by the end of 2015. The actions also include eliminating inkjet development worldwide, including costs related to facilities, tooling, equipment, contract termination, and scrapping in process inventory, which are expected to be principally complete by the end of 2013.

These restructuring actions are expected to result in the elimination of approximately 1700 positions worldwide, including 1100 manufacturing positions.

The company is working with its strategic advisors to explore the sale of the company's inkjet-related technology.

These actions are expected to generate $85 million savings in 2013, increasing to ongoing annualized savings of $95 million beginning in 2015. Savings should be split approximately 65% to operating expense, and 35% to cost of goods sold. The company expects the majority of these savings to favorably impact pre-tax earnings.

The total program pre-tax cost for these actions is expected to be $160 million, with $110 million incurred in 2012, $30 million incurred in 2013, and the remaining $20 million incurred in 2014 and 2015. The total program cash flow impact for these actions is expected to be $75 million, with $40 million impacting 2012, $30 million impacting 2013, and the remaining $5 million impacting 2014 and 2015.