Renowned imaging and printing solutions provider
Lexmark International Inc.
) recently announced its acquisition of German enterprise firm
Saperion, a leading developer of enterprise content management
(ECM) for a purchase consideration of $72 million in cash.
The acquisition will help Lexmark to evolve as a software and
services company and diversify away from its traditional printing
roots. Saperion's ECM software makes highly scalable products
that can be easily integrated with emails, ERP and document
Saperion simplifies the management of a large volume of
information, reduces cost and smoothens the business process,
thereby increasing its customer base and helping to garner
additional market share. The newly acquired unit will not only
strengthen Lexmark's offerings, but also offer access to big
customers such as
Anadarko Petroleum Corp.
British American Tobacco plc
Lexmark's decision to diversify into software and services
follows a trend among major hardware providers, such as IBM, HP
and Dell. The traditional printing market in particular has been
in secular decline for quite some time and consumable supplies
have largely moved to smaller local players. Considering the
difficult market conditions and the company's need to jumpstart
its software business, Lexmark has resorted to a number of
acquisitions over the past year.
Lexmark's acquisitions have strengthened its Perceptive Software
revenues. While lackluster demand for its legacy consumer
products resulted in a revenue decline in the last quarter, this
was mostly evident in the 5.0% revenue decline in the Imaging
Solutions segment. Perceptive Software revenue on the other hand
grew a whopping 41.0%.
Lexmark International is a manufacturer of consumer and
business printing products, solutions and consumables. Its
offerings include inkjet, monochrome and color laser printers,
dot matrix printers and multi-function devices.
We see good growth prospects for Lexmark in the software sector
although the company is also trying its luck in new hardware
solutions. But the overall macro uncertainty could have an effect
on product demand. Lexmark has a strong market position, but
intense competition has led to a steep decline in hardware
pricing in the computer peripherals market.
Currently, Lexmark has a Zacks Rank #3 (Hold).
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