Lexmark’s ‘Perceptive’ Strategy Pays Off Well Ahead of Schedule

Lexmark’s ‘Perceptive’ Strategy Pays Off Well Ahead of Schedule

Lexmark’s decision a little more than a year ago to exit the inkjet printing business wouldn’t look quite as brilliant today if not for the tremendous and immediate performance of its Perceptive Software unit. With more services and software acquisitions under its belt – and surely more on the way – CEO Paul Rooke and company are reminding everyone in this industry that more is often lost by indecision than any one wrong (or risky) decision.

Rather bemoan what we already know – printing has and will continue to decline and hardware sales will, for the most part, follow suit – let’s acknowledge that Lexmark and most of the other top-tier OEMs have and still do make a ton of money from this retracting sector. No matter how dire the outlook, how bleak the landscape, it’s still not easy for any publicly traded company to prematurely walk away from millions of dollars in profits.

Saying that, Lexmark deserves credit for making the best and most forward-thinking decision – some might say the only decision – to abandon a dying, albeit lucrative, cornerstone of their business and identity in favor of new businesses based on services and managed digital content. It’s the same conclusion that all the other major OEMs – some faster and more significantly than others – have come to as they awkwardly (and slowly) kiss the traditional printing model goodbye before sneaking off to Silicon Valley to sync up with their digital mistresses.

So far, so good. But it didn’t come easy. Laying off about 13 percent of your workforce and eating roughly $160 million in restructuring chargers never is.

However, the Perceptive Software unit it acquired in 2010 recorded sales of $59 million in the third quarter, up 38 percent from the year-ago quarter. Overall, Lexmark’s Imaging Solutions and Services unit checked in with $837 million in the quarter and managed print services sales surged up 18 percent to $184 million. Meanwhile, inkjet sales plummeted 44 percent from the prior year to just $84 million, or less than 10 percent of the company’s total sales in the three-month period.

"Lexmark's value proposition is unique and squarely focused on helping our customers solve their unstructured information challenges, enabling us to lead in this large and expanding market," Rooke said in the earnings release.

Amen.
Building the new-look Lexmark byte by byte
Perceptive Software isn’t the only enterprise content and document management software acquisition putting fresh wind behind Lexmark’s sails.

In August, it shelled out $72 million for Saperion AG, an ECM and business process management software with customers including Lufthansa, Vodafone, Daimler and Siemens. In March, it snapped up ISYS Search Software, an Australian company that builds enterprise search solutions, for $32 million and Nolij Corp., a developer of Web-based document imaging and workflow software, for about the same amount.
And earlier this month, it paid $54 million in cash for PACSGEAR, a leading provider of connectivity solutions for hospitals and health care facilities. PACSGEAR solutions, which are used to capture, manage and share medical images and other relevant documents, will be incorporated into Lexmark's picture archiving and communication systems (PACS) and electronic medical records (EMR) systems.

Throw in San Francisco-based Twistage, which developed a cloud platform for managing video, audio and image content and Seattle-based AccessVia, which makes software that prints on-demand in stores on printers, MFPs and handheld devices, and you can see where Lexmark thinks it belongs today, tomorrow and long into the future.

"Lexmark is continuing to increase shareholder value through acquisitions and organic investments that are accelerating our transition to a higher value solutions portfolio, and through the ongoing capital return of more than 50 percent of free cash flow," Rooke added.

Rave reviews from Wall Street
This aggressive, expensive and foreward-thinking strategy manifested in a much-better-than-expected third quarter across the board. Total sales checked in at $890.5 million – well above the $871.7 million consensus estimate – while net income, excluding one-time items and charges, came in at 95 cents a share, besting the Street forecast of 91 cents a share.
But it gets even better.

Lexmark, which had been projecting combined sales growth of about 15 percent for its Perceptive Software and MPS units, now expects those figures to “be a little more as we finish up the fourth quarter,” according to Rooke.

After drastically revising its full-year sales estimates as the unavoidable consequence of turning its back on the inkjet crowd, Lexmark is now raising its 2013 sales and earnings targets entirely on the strength of these new software and services units. Now its full-year sales are expected to only decline by between 5 percent and 6 percent – a slight but certain improvement from the 6 percent to 7 percent it originally forecast.

This double dose of good news pushed Lexmark (NYSE: LXK) shares up 7 percent in the hours immediately following the earnings release on Tuesday. Earlier in the week, Tigress Financial upgraded the stock from a “buy” to a “strong buy” recommendation.

For now, seven of the 11 analysts following Lexmark maintain an “underperform” rating on the stock, while three others have assigned it either a “hold” or “neutral” recommendation.

Zacks Investment Research is one of the firms that reiterated its “neutral” rating on the stock shortly after the third-quarter results and full-year outlook were revealed.

“Though synergies from the recent acquisitions and renewed focus on the software space could set it back on the growth path, their impact on results could still be some way off,” a Zacks analyst wrote in a research note. “Though constant pricing pressure from competitors such as Canon, Xerox and Hewlett-Packard and a high debt burden will be concerns, we expect Lexmark to turn the tables with an increased focus on software and services.”

Expect more of this same "focus" from Lexmark and its OEM brethren throughout 2014.

Posted by Larry Barrett on 10/28/2013

AUXILIO Releases Case Study on How its MPS Program Proved Integral to Barnabas Health’s Multi-Hospital Clinical Technology Transformation Project

Company’s MPS Team and Expertise in Hospital Print Infrastructures Results in Cost Avoidance
Mission Viejo, CA – October 15, 2013 - AUXILIO, Inc. (AUXO.OB), the nation’s pioneer and leading Managed Print Services (MPS) company for health care, announced the release of a case study summarizing the integral role its MPS strategies and solutions played in the successful implementation of Barnabas Health’s massive, system-wide Clinical Technology Transformation Project.

Entitled AUXILIO MPS Specialists and Expertise is Integral to Clinical Technology Transformation Project at Barnabas Health, the case study outlines how AUXILIO worked collaboratively with Barnabas Health’s leadership to assist in the implementation of its enterprise-wide Clinical Information System (CIS) and Electronic Health Records (EHR) to ensure connectivity of devices across the entire health system helping the care organization reach its ultimate goal of enhancing patient care using advanced technology.
“Barnabas Health is one of the most prestigious hospital systems is the U.S. and we are grateful to be its trusted MPS business partner since 2005,” said Joseph J. Flynn, President and CEO of AUXILIO. “As part of our expertise and service to support the health system’s massive electronic transformation project, our on-site MPS team provided the print expertise, strategies and support mechanisms that are vital for the successful re-alignment of workflow processes necessary to design a new technologically advanced infrastructure for the exchange of information between devices and software. Our team’s support in helping manage this complex environment resulted in cost avoidance in resources and helped Barnabas Health achieve successful execution of the transformative project goals across the entire care organization.”
AUXILIO is the only vendor neutral, health care exclusive MPS company in the US. Its unique MPS business model includes placing full time, on-site teams of print services experts to build sustainable print programs to reduce volume and to manage print-related assets and expenses. The company is at the forefront of providing hospitals specialized knowledge and expertise as they tackle the transformative shift to e-records compliance to meet the ‘meaningful use’ federal mandates. Once contracted for MPS services, the company assumes all expenses related to the production of documents in hospitals, including services, supplies, equipment, legacy service agreements, parts, finance charges and labor. AUXILIO manages over 1.6 billion documents per year and more than 50,000 devices from multiple manufacturers and serves over 250,000 caregivers from coast to coast.

About AUXILIO, Inc.
AUXILIO, Inc. is the pioneer of Managed Print Services for the health care industry, working exclusively with hospitals and hospital systems throughout the United States. We are vendor independent and provide intelligent solutions, a risk free program and guaranteed savings. AUXILIO assumes all costs related to print business environments through customized, streamlined and seamless integration of services at predictable fixed rates that are unmatched in the industry. We work collaboratively to assist our health care-partners in the delivery of quality patient care. The service and solutions provided by our on-site Centers of Excellence professional print strategy consultants deliver unparalleled customer service across the industry. For more information about AUXILIO, visit www.auxilioinc.com.

Forward Looking Statements
This release contains certain forward-looking statements relating to the business of AUXILIO, Inc. that can be identified by the use of forward-looking terminology such as “believes,” “expects,” “anticipates,” “may” or similar expressions. Such forward-looking statements involve known and unknown risks and uncertainties, including uncertainties relating to product/services development, long and uncertain sales cycles, the ability to obtain or maintain patent or other proprietary intellectual property protection, market acceptance, future capital requirements, competition from other providers, the ability of our vendors to continue supplying the company with equipment, parts, supplies and services at comparable terms and prices and other factors that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. Certain of these risks and uncertainties are or will be described in greater detail in our Form 10-K and Form 10-Q filings with the Securities and Exchange Commission, which are available at http://www.sec.gov. AUXILIO, Inc. is under no obligation (and expressly disclaims any such obligation) to update or alter its forward-looking statements whether as a result of new information, future events or otherwise.

Survey Affirm the Power of Print In Households Earning $100K+

Affluent Population Grows Larger, Wealthier, and More Engaged with Media

Digital Media Use Grows Sharply, But Largely Supplements – Rather than Replaces – Traditional Media Use

Thursday, September 19, 2013

New York, NY — The 2013 Ipsos Affluent Survey USA, released today, reports that the Affluent population in the United States has increased in size and financial resources; moreover, Affluents continue to be enthusiastic consumers of traditional media, even while their use of digital media continues to grow sharply. The study projects that there are now 62.5 million U.S. Affluents, up more than 6% over the past two years (Affluents are defined as adults aged 18+ living in households with at least $100,000 in annual household income). Compared to 2012, Affluents’ average income rose 4.6% to $200,200, and their net worth rose 2.0% to $1.01 million.
Ipsos also announced today that the study, formerly known as the Mendelsohn Affluent Survey, is being re-branded as the U.S. component of the Ipsos Affluent Survey, which details the lifestyles and media habits of high-earning individuals in 51 countries. According to Yannick Carriou, Global CEO of Ipsos MediaCT, “The Ipsos Affluent Survey delivers an unprecedented global perspective on the most important consumers of a wide range of goods and services, offering clients a worldwide platform for Affluent media planning and consumer insights not available anywhere else.”
Other findings from the 2013 Ipsos Affluent Survey USA reaffirm the power of the hard copy print publications in Affluent lives. As in 2012, 81% of Affluents read at least one of the 142 reported print publications (135 magazines and 7 national newspapers); coupled with the growth of the Affluent population, the number of Affluents who read a print publication rose to more than 50 million. The total duplicated average-issue audience (AIA) is more than 207 million, a figure that declined 2.4% from 2012.
The study reports that print readership skews significantly higher among Affluent Women, Ultra Affluents ($250K+ HHI) and Wealthy consumers ($500K+ HHI). For example, Affluents read 16.7 issues from 7.4 different titles, but Ultra Affluents read 22% more titles (9.0 vs. 7.4) and 29% more issues (21.6 vs. 16.7). The skews are even more dramatic among Wealthy consumers, who read 45% more titles (10.7 vs. 7.4) and 62% more issues (27.0 vs. 16.7) than Affluents. Compared to Affluent men, Affluent women read 16% more titles and 17% more issues.
While Affluent print readership remains pervasive, Affluent enthusiasm for digital media and mobile devices continues to grow sharply. For example, among Affluents…

• Smartphones: 63% now own a smartphone, up from 55% in 2012 and 45% in 2011.
• Tablets: 41% now own a tablet, up from 26% in 2012 and just 9% in 2011.
• Internet: As in previous years, virtually all Affluents (99%+) use the Internet. Hours online in a typical week rose to 41.6, up from 37.4 in 2012; Affluent Millennials (those aged 18-31) average 52.7 hours online weekly, up from 42.4 in 2012. Several websites related to entertainment, shopping, travel and social media showed significant growth in Affluent visitors.
• Magazine/newspaper apps: 6.9 million Affluents have downloaded a magazine app, up 47% from 4.7 million in 2012; 8.5 million Affluents have downloaded a newspaper app, up 21% from 7.0 in 2012.

“Affluents continue to show a great enthusiasm for entertainment, information and connectivity across media and platforms,” says Dr. Stephen Kraus, Chief Insights Officer for the survey. “Affluents’ growing digital media use tends to supplement – rather than replace – their traditional media use, and the result is real growth in their engagement with media as a whole.”
(Click to enlarge image)
For more information on this news release, please contact:
Stephen Kraus, Ph.D.
SVP, Chief Insights Officer
Audience Measurement Group
Ipsos MediaCT
(415) 293-9711
Steve.Kraus@ipsos.com
For more highlights from the Ipsos Affluent Survey USA please view our webinar:
America's Affluent TODAY: New Insights From Our Annual Tracking Survey
About the Ipsos Affluent Survey USA
Formerly branded as the Mendelsohn Affluent Survey, The Ipsos Affluent Survey USA has heritage of industry leadership that dates back 37 years. With 4,000+ individual users from 400+ subscribing organizations, the study is widely recognized as a definitive source of information about the lives, lifestyles, purchase patterns and media habits of Affluent Americans. Among other uses, it serves as a currency study for Affluent print advertising – the agreed-upon source of audience measurement data used by agencies, advertisers and media companies in negotiating the cost and placement of advertising. The 2013 Ipsos Affluent Survey USA was conducted from March through July, and has a sample size of 13,348 adults living in households with at least $100,000 in annual household income. The survey uses a random probability sample drawn from address-based sample frame as well as other rigorous methodologies to ensure the results are projectable to the population of America’s 62.5 million Affluents. Roughly 20% of U.S. households, Ipsos analyses show that Affluents garner 60% of U.S. household income, and hold 69% of U.S. net worth.
The Ipsos Affluent Survey provides a global perspective on Affluents in 51 countries. It combines the resources and insights of industry leading studies around the world, including the studies previously branded as the Mendelsohn Affluent Survey (USA), PAX (covering Asia Pacific), and EMS (covering Europe, Africa, Latin America and the Middle East).
About the Audience Measurement Group of Ipsos MediaCT
The Ipsos Affluent Survey USA is produced by the Audience Measurement Group of Ipsos MediaCT. Led by a team of senior professionals, the Audience Measurement Group is recognized for its expertise in Affluent lives, lifestyles and media use. Ipsos MediaCT specializes in the intersection of media, content and technology.
About Ipsos
Ipsos is an independent market research company controlled and managed by research professionals. Founded in France in 1975, Ipsos has grown into a worldwide research group with a strong presence in all key markets. In October 2011 Ipsos completed the acquisition of Synovate. The combination forms the world’s third largest market research company.
With offices in 85 countries, Ipsos delivers insightful expertise across six research specializations: advertising, customer loyalty, marketing, media, public affairs research, and survey management.
Ipsos researchers assess market potential and interpret market trends. They develop and build brands. They help clients build long-term relationships with their customers. They test advertising and study audience responses to various media and they measure public opinion around the globe.
Ipsos has been listed on the Paris Stock Exchange since 1999 and generated global revenues of €1,789 billion (2.300 billion USD) in 2012.
Visit www.ipsos.com to learn more about Ipsos’ offerings and capabilities.