One-On-One with Lexmark CEO Paul Rooke

Rooke discusses Lexmark’s plans to expand in software and managed print services, and become a broader solutions provider.

Ed Lane: Lexmark sells its products in more than 170 countries and had revenues of $3.8 billion in 2012. Fiscal year 2012 (ending Dec. 31, 2012) was a bumpy road. Our interview will touch on a number of the macroeconomic factors that caused Lexmark’s stock price to decline 38 percent the past year to $23 per share on March 1, 2013, and on Lexmark’s plans for future growth. In August of last year, Lexmark announced it was exiting the inkjet printer category. What were the key business factors related to this decision?

Paul Rooke: That was certainly a tough decision. Lexmark is a company in transition; we’re undergoing a transformation from a hardware-centric to a solutions-centric company. Lexmark, over the last two or three years, has been divesting certain pieces of its business while investing in others. Lexmark actually started exiting its consumer inkjet business in late 2007.

The Lexmark brand was known because its inkjet printers were in many retail outlets for years. We moved inkjet technology upstream to become more of a business inkjet – a higher performance and value product. Lexmark’s inkjet printers were targeted to small and medium businesses through retail channels like Office Depot and OfficeMax, but Lexmark couldn’t generate enough business to sustain inkjet development. We decided it wasn’t going to be a long-term profitable model and decided to pull the plug and exit the remaining inkjet business. Lexmark is completely out of inkjet now, but it is making many investments in software businesses in order to become a solutions provider.

Inkjet is still a viable technology, which Lexmark still has. But Lexmark also has and it is heavily investing in laser technology, which is a very viable and competitive color technology even against inkjet.