Dell may turn to Xerox, Epson for printers-analyst
May 16, 2003 1:37:00 PM ET
NEW YORK, May 16 (Reuters) - Dell Computer Corp. (DELL), the No. 1 personal computer maker, could join forces with imaging companies Xerox and Epson as it bolsters its line of consumer inkjet printers, an industry analyst said on Friday.
In March, Dell moved into the lucrative market for desktop printers, combination printer/fax/scanner devices and replacement ink cartridges with Dell-branded products made by Lexmark International Inc. (LXK).
Dell, in its agreement with No. 2 inkjet printer maker Lexmark, took aim at its archrival in the computer sector, Hewlett-Packard Co. (HPQ) -- which is No. 1 in printers.
Dell Chief Financial Officer James Schneider on Thursday said the company's printer business is "off to a fast start, with results that are two times our internal demand projections." He added that Dell would introduce a second wave of new printers "in the next several months."
The company has said in the past that it planned to work with more than one company for its printer products. That has also been its strategy in computers, where it uses multiple suppliers that compete against each other for its business.
Needham and Co. analyst Charlie Wolf, in a note to clients, suggested Dell's next partner would be Xerox Corp. (XRX), followed by Epson, a unit of Japan's Seiko Epson.
"Xerox has a huge patent portfolio covering both laser and inkjet printers. So it represents a natural fit," he said.
Wolf has followed Dell's foray into the printer business closely for the past couple of years for Needham, a small investment firm based in New York.
A Dell spokeswoman declined to comment on the speculation.
A spokeswoman for Xerox, which exited the low-end printer market in 2001 amid a huge cost-cutting effort, said the company does not comment on rumors. Calls to Epson on Friday morning were not returned.
In April, Lexmark chief executive Paul Curlander said the Dell agreement, which calls for Lexmark to deliver machines and supplies which sell under the Dell brand, was "a small part of what we do."
"We don't look to OEM (original equipment manufacturers) for growth, we don't think the investment community should look to the OEM business for growth," he told analysts on a conference call.
Dell's Schneider on Thursday said that printers are a "tier two" business for Dell but represent longer-term growth and profit potential for the Round Rock, Texas, company. (Additional reporting by Caroline Humer) REUTERS
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