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Hewlett-Packard, Lexmark Stocks Fall on Kodak Launch

NEW YORK (AFX) - Shares in Hewlett-Packard and Lexmark International moved lower on concern Eastman Kodak's move into the inkjet printer business could lead to market share loss, but analysts said Lexmark has more to fear than HP over the new competition.

At 2.56 pm, Hewlett-Packard shares were down 1.7 pct at 42.10 usd while shares in Lexmark dropped 0.4 pct to 62.35 usd.

Earlier today, Kodak said it would start selling printers ranging in price from 149.99 usd to 299.99 usd beginning in March.

Where Kodak's new product differs from inkjet printers made by companies like Canon, Hewlett-Packard and Lexmark, is in how much customers pay to replace ink.

Kodak said most replacement ink cartridges cost at least 30 usd. But Kodak plans to charge just 9.99 usd for black ink cartridges and 14.99 usd for colour ink, saving customers money and therefore hoping they are motivated to print more.

'We don't believe Kodak poses a significant challenge to HP this year and perhaps not next year,' said Citigroup analyst Richard Gardner. 'Lexmark faces greater risk given its more-tenuous presence in the inkjet market and what appears to be inferior tech versus Kodak's vast IP (intellectual property).'

Over at FTN Midwest, analyst Bill Fearnley said Lexmark International's printers could lose shelf space in retailer stores if Kodak's printers prove popular as the company emphasizes the quality of its photo prints.

Kodak's arrival in the inkjet market is also a threat to Hewlett-Packard, but less so than for other inkjet makers, according to Fearnley.

He said HP's inkjet printers remain a 'must-carry' brand and 'with its recent inkjet supply deal with Staples, it is likely to remain number one with resellers.'

In addition, said the analyst, HP has been investing in their higher-end printing business, higher-end lasers, Indigo press technology and online photo technology.

'This helps reduce the dependence on the inkjet business,' said Fearnley.

Goldman Sachs analyst Laura Conigliaro said Kodak prices for its new printers appear too high.

'Kodak's printer prices appear to be at least 50-70 usd too high, with neither the 149 usd (no LCD display) nor the 199 usd having fax capability versus 150 usd for an AIO (All-In-One) from HP with an LCD and a fax, raising questions about how much volume Kodak will actually be able to generate,' she said.

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