Lexmark
Lexmark (LXK): The only focused, integrated printer company of any consequence. Lexmark develops its own ink – jet, monochrome, and color laser technologies. The printing business is a so – called razor and razor blade business. The money is in the ink, not the printers. Price competition in the consumer segment of the market has recently intensified. However, Lexmark derives more than 75% of its profits from the business segment.
Over the past year, Lexmark’s market cap has nearly halved. The company now trades at just over one times sales. It has a strong balance sheet and generates several hundred million dollars of free cash flow. Lexmark’s return on equity has averaged well over 20% for the past decade.
I wrote a lengthy analysis of Lexmark on January 13th, 2006. Five other pieces worth reading are:
The Motley Fool's "Lexmark Hums Along" and "Lexmark's Guidance Looks Spotty".
Forbes’ “Why Aren’t Consumers Buying Lexmark?”
Buffetteer.com’s “Was Buffet Wrong on the ‘Mark?”
And a Business Week article entitled: “Upstarts Spread in the Ink Wars”
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