Holiday Rumor: Lexmark and Possible Misprints

December 14, 2015

Holiday festivities in Kentucky feature good cheer and bourbon. The combination yields interesting behavior and rumors. At a hoe down this weekend, one tippler talked about Lexmark, the progeny of IBM in 1991. Lexmark became a publicly traded company in 1995 and became one of Kentucky’s technology poster children. Today Lexmark is more diversified because of a push that began to gain speed in 2010 with its purchase of Perceptive Software. The idea is that Lexmark would become an end to end solutions provider, not a vendor of printers and ink.

The company blipped my radar when it purchased two outfits with search and content processing software. ISYS Search Software had been around since the late 1980s, and Brainware also had some miles on its odometer. Brainware had built a search solution based on its patented n-gram technology. Both brands have mostly disappeared since the Lexmark acquisition.

The company then purchased for $1 billion the one time big dog in document scanning. Between Perceptive and Kofax, Lexmark had a vision of becoming a document processing company. The idea was not a new one in Lexington, which had fostered Exstream Software, purchased by Hewlett Packard in 2008.

I read “Company Shares of Lexmark International, Inc.” and learned:

The Company has disclosed insider buying and selling activities to the Securities Exchange, The officer (Vice President), of Lexmark International Inc /Ky/, Coons Scott T.R. had unloaded 10,000 shares at $38.24 per share in a transaction on July 21, 2015. The total value of transaction was $382,400. The Insider information was revealed by the Securities and Exchange Commission in a Form 4 filing.

The December 10, 2015, Forbes’ article “Weak Demand For Printer Supplies And Hardware Will Continue To Hinder Lexmark’s Printer Business” did little to suggest that the grouser’s comments were wide of the mark.

How has that Lexmark transformation from IBM printer manufacturer to solutions outfit worked out?

If the information shared at the holiday party is accurate, the answer is, “Not so well.” I have no idea if the comments were accurate, muddled by Kentucky’s famous distilled spirits, or the individual’s annoyance that his shares in Lexmark were not putting hay in his horse barn. But the points I noted were:

  1. The top dog at Lexmark made noises that he wants to leave the company, perhaps as quickly as the new few weeks. The separation terms apparently are rumored to be sufficiently generous to put horses and hay in his stalls.
  2. The company is for sale and is being shopped in the proper Bluegrass manner. I assume this means with investment bankers who understand the value of digital horse flesh.
  3. Sales of printers are on hold. The idea is that no one is buying these devices for holiday gifts. The hardware folks at Lexmark are understandably acting like the Grinch stole their Christmas.
  4. Morale at the company seems to be entering a winter freeze. According to the party talker, grousing is a popular pastime.

The real journalism outfit (Wall Street Journal) reported in October 2015 that Lexmark was “exploring” a sale. So that item in my list of notable party rumors may be accurate. The point about the president, the employee attitude, and the president’s desire to find his future elsewhere may be fluff.


The IBM Lexmark Infoprint EMP156 is perfect for a home office. Don’t forget to order the options: stacker, feeder, and “attention” light.

Lexmark has about $1 billion in debt from its purchase of the document imaging company. The company’s repositioning seems like a good MBA type idea. The problem is that Lexmark has some IBM DNA. The promising Kapow unit is not likely to scale. The enterprise search sector is not likely to scale. The demand for n-gram search is not likely to explode with growth. Here’s the Google finance graph which suggests that revenues and profits are not taking off like SU 35:


My view is that the there will be some disruption for employees (not a good thing in my opinion) and for the city of Lexington (not a good thing for the technology pitch from the Chamber of Commerce).

Worth watching to see if the party chatter is accurate.

Stephen E Arnold, December 14, 2015


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