Leading printing and imaging solutions provider, Lexmark International Inc. (LXK) was recently awarded a contract by TBC Corporation, one of the largest marketers of automotive replacement tires and services.
TBC awarded a three-year Managed Print Services (MPS) contract, intending to use Lexmark’s expertise in MPS to improve and optimize its printing environment and reduce print output costs across its more than 800 U.S. retail tire and automotive maintenance stores, as well as in its Wholesale Division.
Lexmark is expected to optimize the printing environment at TBC Corporation’s retail operations by deploying innovative, award-winning printing technology and ensuring appropriate allocation of devices.
Moreover, the company will proactively manage TBC’s consumables to streamline processes associated with maintaining a stock of toner cartridges and other parts. Lexmark will have the exact information about supplies at TBC and accordingly replenish depleted stock by having them shipped from the retail stores. Thus Lexmark will help do away with the company’s need to keep a costly inventory of supplies on hand.
Lexmark is on a deal-winning spree, as it has also signed a contract with the U.S. Department of Veterans Affairs. The contract involves placement of more than 20,000 workgroup monochrome and color laser printers at 260 VA locations, including outpatient clinics in the United States, within 90 to 120 days.
The contract is expected to help the VA save more than $15.0 million in standard purchasing costs.
As a new branch of the printing business, MPS is attracting major industry players. Gartner sees this as the capability of the service provider to take primary responsibility for meeting customers’ office printing needs, including printing equipment, supplies, service and overall management. Lexmark has entered this business in a big way.
Lexmark operates in a highly competitive market. So there is constant pricing pressure among major players to snatch market share from one another. The market is narrowing owing to the ramp in digital technology and e-commerce.
Lexmark’s first quarter results were disappointing, as both top and bottom lines missed Zacks expectations. Lexmark provided a lackluster revenue outlook for the second quarter. Though new products could stem market share losses, the positive impact on results could still be some way off. Though Lexmark remained unaffected by the Japan disaster, the company expects a mild jolt in its second quarter earnings.
However, Lexmark may benefit from its retail presence as it sells its products through Best Buy Co. (BBY) stores in the U.S.
Currently, Lexmark has a Zacks #4 Rank, implying a short-term Sell rating.
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