) dished out $31.5 million for San Francisco-based Twistage and
Seattle-based AccessVia in what appears to be an attempt to
diversify away from its hardware business.
Both acquisitions bring specific cloud capabilities that could
reduce the company's dependence on its hardware business and
enable it to develop more contemporary offerings.
Twistage offers a pure cloud software platform, which help
companies to manage video, audio and image content. This
expertise will help Lexmark in bridging the technical gap in its
AccessVia offers signage solutions, which helps them to create
and produce retail shelf-edge materials, on a single
platform. Using this technology, one can take signatures in
different output devices, which can be published in different
digital signs or electronic shelf tags.
Moreover, the company's software works on prints on-demand,
especially in stores as well as on more traditional monochrome
and color laser printers. This apart, it also functions on smart
multi-function products and handheld devices, or centrally in
high-speed production print facilities attracting customer
AccessVia, together with Lexmark's managed print services
(MPS) will offer efficient solutions for the print and document
process market. We believe that the technology acquired will
support Lexmark's MPS business.
A focus on cloud-based technologies could lead to the
development of higher-margin software-related products and
services. The resultant revenue growth could even offset the
revenue declines in the hardware business.
To improve its clinical content and Electronic Medical Records
(EMR) business, Lexmark acquired Acuo Technologies LLC. in
January 2013. Lexmark has always been active on the acquisition
front. The company is making sustained efforts to improve its
revenue model by focusing more on software than hardware. This
was clearly the rationale behind its last five acquisitions.
The strategy to grow via acquisitions seems to be appropriate,
yet concerns regarding companies across the globe adopting the
paperless office concept remain. This new concept might have an
adverse effect on Lexmark's traditional printing business.
Moreover, the growing availability of low cost ink and
consumables are pressures on its ink and cartridge business,
which is already in the middle of a price war with players such
Hewlett Packard Company
Lexmark carries a Zacks Rank #3 (Hold).
), with an Earnings ESP of +5.88% and Zacks Rank #1 (Strong Buy),
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