During their quarterly earnings announcement Tuesday, Lexmark International executives might make their first public comments on how efforts are going to sell the company's inkjet printer operations.
The company, based in Lexington, announced in late August that it would shut down its increasingly small inkjet operations. The move came a few years after the company stopped producing inkjet printers aimed at home consumers because the customers weren't printing enough to meet profit expectations. Instead, the company had used the inkjet technology to complement its laser printer lines aimed at businesses.
But the company said the move to inkjets designed for businesses wasn't profitable enough, leading to the decision to lay off 1,700 employees worldwide during the next couple of years. The bulk of those, 1,100, are overseas workers focused on the production of inkjet cartridges. An additional 350 are full-time employees at its headquarters in Lexington, where 200 contractors also are being cut.
Lexmark executives said at the time that they hoped to sell the company's inkjet technology, which includes about 1,000 patents.
But analysts say it's unlikely that the company will find a buyer for the entire operation or that it will bring a significant amount of money.
"It would be difficult to sell," said analyst Shannon Cross of Cross Research, noting that interest was not nearly as high as expected in a recent patent auction by bankrupt Kodak. The latter also recently closed its inkjet operations.
Lexmark is in a quiet period before its earnings announcement Tuesday and declined to comment.
It also might not even be possible to sell all of the inkjet operations, said Larry Jamieson, director of hardware and supplies services for market researcher Photizo Group.
He and Cross explained that Lexmark and other inkjet hardware manufacturers, such as HP and Canon, have cross-licensing agreements in which each uses some of the other's patents.
"I certainly don't think Canon or HP would want to create a competitor," Cross said. "I can't really pinpoint any one person who's going to want to buy the whole portfolio."
Jamieson said it's possible companies could be interested in certain patents but noted "there aren't a lot of inkjet companies out there."
There has been speculation that Lexmark will become a buyout target after shedding the inkjet division and becoming a smaller company.
But Cross and Jamieson say it's unlikely the company would have a suitor.
"It's entirely possible someone would be looking to pick them up," Jamieson said. "But I think this is really a move on their part to be a strong independent company. I don't really see it."
While Cross noted there are enough companies with printer operations that consolidation should be happening, she said Wall Street was "fairly negative" on the industry because of trends of declining printing.
"I don't think U.S.-based companies would be keen to expand their exposure to printing," she said.
Jamieson said he doubted other industry players would stand much to gain by trying to purchase Lexmark, either.
"Xerox is already there. HP is already there," he said of the portions of the market in which Lexmark operates. "I'm not sure how much they gain other than being a bigger player."