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Lexmark laser shortages zap SME channel promotions

Microscope contributor

Lexmark expects shortages of its laser hardware to continue to prevent it from running SME channel promotions until some point in the second half of the year.

The Kentucky-based firm is not alone in trying to ramp production to chase ever rising demand; the sector's linchpin HP and most other rivals have faced the same component and manufacturing capacity issues.

During its recently closed first quarter, the shortfall forced Lexmark to prioritise supply to enterprise partners that sell devices and services "rather than just hardware" said CEO Paul Curlander.

The same dynamics had continued in the current quarter he added, "We're not promoting into the channel because we need everything we have to pretty much satisfy the enterprise side and what I would call the value part of our channel."

The assumption Lexmark has made is that it will "alleviate the hardware constraint" during the final six months of 2010 but gave no firm date for improvements.

"We'll see how it plays out in terms of components and overall market demand and Lexmark demand," said Curlander.

Despite this frustrating issue, Lexmark still managed to grow laser hardware revenues 27% in the first quarter, as the economic recovery continues.

Total sales went up 10% to $1.04bn and profits climbed nearly 61% on a year ago to $95.3m, thanks in part to the rounds of redundancies and other cost cutting measures implemented by the vendor in the last eighteen months.

The Printing Solutions and Services Division (PSSD) grew revenues 20% to $717m, while Imaging Solutions Division, formerly its Consumer Printer Division saw hardware revenues decline 6% to $326m.

Related Topics: Desktop PCs, VIEW ALL TOPICS

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