Lexmark International Inc., the U.S. printer maker, plans to eliminate 1,700 positions and shut a factory in the Philippines as it explores a sale of its inkjet technology to bolster profitability.
The inkjet manufacturing facilities in Cebu will be closed by the end of 2015, Lexington, Kentucky-based Lexmark said in a statement today. The company will cut 1,100 manufacturing positions and also reduce positions in research and development, supply chain and support functions. The reorganization will generate annual savings of $95 million.
Printer makers Canon Inc. and Xerox Corp., along with Lexmark, have cut their earnings forecasts this year, citing weaker office equipment sales in Europe. Lexmark Chief Executive Officer Paul Rooke said last month that the company plans to expand its management services and software business to help overcome the economic slump in Europe.
"Today's announcement represents difficult decisions, which are necessary to drive improved profitability," Rooke said in the statement. "Our investments are focused on higher value imaging and software solutions."
The cuts will cost the company $160 million, with $110 million of that this year, Lexmark said. Cash flow will be reduced by $75 million, with a $40 million impact in 2012.
Sales of inkjet hardware and supplies for consumers declined 35 percent in the second quarter from a year earlier, the company said in July. Total revenue will decline as much as 11 percent this quarter, the company said.
Separately, Lexmark said today it will buy back an additional $100 million in its own shares, and that the board has authorized a potential $251 million in future repurchases.
The stock fell 2.3 percent to $19.01 yesterday in New York trading. It has lost 43 percent this year, valuing the printer maker at $1.4 billion.