Thursday, October 11, 2007

No Lexmark deal...yet?

In the recurring rumor mill, Lexmark (NYSE LXK) was reputed to be back in play this week, at least per a number of sources, as summarized by Reuters and Seeking Alpha. But enthusiasm for the the stock waned today, as the shares fell back (early on, well ahead of the rest of the market's late fade), and closed at $41.06, well below the heady $43.80 Wednesday close. (At $41.06 though, LXK is still almost a buck over the Tuesday close.)

And unlike the swirl of the late Spring/early Summer (see "Lexmark Buy-out Drumbeat", when Lenovo and private equity firms were considered possible buyers, the Fall's likely candidate for acquiring Lexmark is none other than Dell. The former do-nothing-wrong company that has struggled in the last couple of years seems to have regained some of its footing, with its stock up 30% from its 52-week low. My speculation about Dell's potentially exiting the printer biz as a part of their re-focusing appears to have been just that, speculation, at least if they're thinking of buying their biggest supplier in the category.

Lexmark's market cap is at $4 Billion, and while they'll be fortunate to reach the $5 Billion mark in revenues for 2007, Lyra estimates the value of just their supplies market, at retail, at about $6 Billion annually. Again, that's at retail, and includes both OEM (branded) and 3rd Party ink and toner.

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