IBM looks set to sell its remaining printer business as it cuts back its product range to maximise profits.
A week after the giant transferred its stake in the PowerPC design centre to partner Motorola, it is looking for other non-core businesses to sell. US sources say it has hired Goldman Sachs to find a buyer for the Colorado based Printing Systems Company, which makes heavy duty laser products.
Analysts expect the asking price to be about $2 billion, equivalent to a year's revenue for the unit when services and maintenance are included.
But the main competitors to IBM's high end printers, Xerox and Dutch based Oce, are unlikely to bid, say observers, because the business is in negative growth, has technology that is incompatible with either rival's, and could raise antitrust questions.
Although IBM would not comment on the specific reports, it has confirmed that its new chief financial officer, Douglas Maine, is undertaking a review of hardware operations. His brief is to identify units that bring low profits and growth, and whose products could be OEMd from other suppliers.
The printer company seems an ideal target, since it is only moderately profitable and is in a slow growth, non-core market for IBM.
IBM has gradually scaled back its printer operations throughout the 1990s. Although it launched the first ever laser and inkjet models, it sold its desktop printer business to a buyout firm in 1991. That company became Lexmark International.
IBM has subsequently relaunched a low end range, but without much success, and printer hardware sales, at 759 million, were one per cent of the company's revenue last year, according to analyst estimates - and falling.
Lower down the printer spectrum, Xerox has set its sights on Hewlett Packard's retail business for low end inkjet and laser models.
Xerox, which normally focuses on the heavy duty and corporate desktop printer sectors, has teamed up with retail chain Tandy and with two US catalogue services, Multiple Zones and CDW. They will push its new line of products, which includes a 40 pages per minute laser printer for $3,500. This is 10 per cent cheaper and 66 per cent faster than HP's fastest office printer, Xerox claimed in a statement.
Xerox' aim is to "drive value and innovation in the printer market with network printers that are faster and less expensive than HP's, with colour inkjets that offer competitive alternatives to HP and with replacement cartridges that deliver quality and greater value for HP's existing printer customers," said Pierre Danon, president of Xerox Channels Group, which will handle the new range.
The products are targeted at home and small business users and aim to eat into HP's 50 per cent share of the inkjet market. They will come to European retailers later this year.
HP retaliated by moving further into Xerox' core photocopier market, announcing two digital colour copiers that will ship in Europe in October.
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