Analysts: Lenovo Might Make Play For Lexmark

In a presentation for clients, analysts Larry Jamieson and Jiqiang Rong of Lyra Research, Newton, Mass., said rumors are rampant in China and on Wall Street that a Lenovo-led group, backed by the Chinese government, might make a play for Lexington, Ky.-based Lexmark as the PC maker seeks to build a major printer business within two to five years.

"It's rather difficult to get moving forward on [building a printer business] if you have to build from the ground up," Jamieson said in the presentation, which was webcast. "[Lexmark does] have inkjet and laser technology. They could use a cash infusion and an investment infusion."

Lexmark manufactures Lenovo-branded printers for Raleigh, N.C.-based Lenovo, but the business is only a sliver of the PC company's sales.

Lenovo and Lexmark spokespeople on Wednesday declined to comment on the analysts' remarks, each saying they wouldn't discuss rumor or speculation.

Jamieson made his remarks while displaying a chart on potential Lenovo printer acquisition targets, titled "One Obvious Candidate: Lexmark. Rumors Already Flying in China and on Wall Street."

He listed reasons why a Lenovo acquisition of Lexmark would make sense, including the following: Lexmark's market capitalization has dropped 50 percent since 2004; Lenovo could deal a blow to rival Dell, which has a deal with Lexmark to build Dell-branded printers; and Lexmark and Lenovo share a corporate heritage with IBM. Lexmark is an IBM printing division spinoff, and Lenovo last year bought IBM's PC business, he noted.

"Lenovo-Lexmark rumors have been flying around for quite a while," Jamieson said.

In addition, Lenovo CEO William Amelio and Lexmark CEO Paul Curlander are both former IBM executives.