(LXK) Lexmark International Wins MPS Deal

Leading printing and imaging solutions provider Lexmark International Inc. (LXK) won a 3-year contract from a renowned tire and auto repair company TBC Corporation. Financial terms of the deal were not disclosed.

Per the contract terms, Lexmark will provide its Managed Printing Services (MPS) to TBC Corp, which aims to upgrade and reduce operational costs of its printing environment. Apart from this, Lexmark will enhance the manner in which TBC Corp handles and orders printer consumables.

With Lexmark’s technology, the company will be able to keep its inventory up to date and thereby order the exact amount of consumables required. The process should subsequently clear the clutter at TBC Corp and more importantly, save it from blocking a huge amount of money.

TBC Corp. has begun deploying Lexmark’s MPS across its retail tire and automotive maintenance stores, as well as its Wholesale Division throughout the U.S.

As a new branch of the printing business, MPS is attracting major industry players. Gartner sees this as the capability of the service provider to take primary responsibility for meeting customers’ office printing needs, including printing equipment, supplies, service and overall management. Lexmark has entered into this business in a big way.

Lexmark operates in a highly competitive market. So there is a constant price war among major players to snatch market share from one another. The market is narrowing as digital technology and e-commerce become more prevalent.

Lexmark’s first quarter results were disappointing, as both top and bottom lines missed Zacks expectations. The company provided a lackluster revenue outlook for the second quarter. Though new products could stem market share losses, the impact on results could still be some ways off. Though Lexmark faced little impact from Japan’s disaster, the company expects a mild jolt in its second quarter earnings.

However, Lexmark may benefit from its retail presence as it sells through Best Buy Co. (BBY) stores in the U.S.

Currently, Lexmark has a Zacks #5 Rank, implying a short-term Strong Sell rating.

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