Lexmark International (NYSE:LXK) recently signed an agreement to provide printing and imaging solutions to the leading Middle East retail giant, MAF Retail, across its region-wide network. The deal covers nearly 70 Carrefour Hypermarkets & Supermarkets across 8 Middle Eastern countries including the UAE, Saudi Arabia, Oman, Kuwait, Bahrain, Qatar, Egypt, Jordan and the company’s corporate headquarters.  This is a welcome development for the hardcopy peripheral maker especially as it lost significant market share in the third quarter of 2011. Lexmark along with other key players in the market like Canon and Epson lost significant share in the quarter to the market leader HP (NYSE:HPQ), which further extended its dominating share to 56% in the U.S. hardcopy peripheral market. ((U.S. Hardcopy Peripherals Market, IDC)
We currently have a $32.62 Trefis price estimate for Lexmark, which is in line with the market estimate.
- Lexmark Earnings: Revenue Decline Across Printer Division Continues
- Lexmark Pre Earnings: Printer Revenue To Decline, Software Revenue To Report Growth
- Lexmark Earnings: Revenue Declines Less Than Expected As Merger And Delisting Seems Eminent
- Lexmark Earnings Preview: Decline In Revenue To Continue
- What Percentage of Lexmark’s Stock Price Can Be Attributed To Growth?
- Lexmark Earnings: Revenue Declines More Than Expected
Can Lexmark Hold On To Its Market Share?
We currently estimate Lexmark’s share in the global laser printer market at 3.4% and forecast it to remain steady at current level in the future. We believe the agreement with MAF Retail will help boost Lexmark’s printer sales in the coming years and also help improve the firm’s visibility in the potential Middle East market providing the firm some much needed respite.
However, if the company’s market share continues to decline as has been the trend historically, there could be significant downside to our $32.62 Trefis price estimate for Lexmark.
Lexmark More Reliant on Perceptive Software for Growth
As Lexmark continues to lose share in the stagnating hardcopy peripheral market, we believe the firm now relies heavily on its newly acquired Perceptive Software business. We recently published how Perceptive Software has become significant in driving the firm’s revenue growth and has potential for future expansion. (See Lexmark Look Like a Dud, Except for its Imaging Solutions Business)Notes:
- Lexmark provides priniting solutions to MAF Retail, ctmea.com [↩]