My takeover thesis is gaining traction as well. In a recent RealMoney article entitled Look for a Wave of Tech Mergers, Tim Melvin has the following to say about lonely Lexmark.
strikes me a potential takeover candidate, particularly if the market takes the price lower in the months ahead. The company had a competitive advantage a decade ago, selling printers for less than its competitors. In recent years, however, its cost advantage has been eliminated, and the company has struggled. Hewlett-Packard has dominated the market for printers recently, especially in the increasingly popular laser markets. The competitive marketplace and weak economy could continue to pressure Lexmark's results into 2010. As a result, the shares have become cheap and may be attractive to a buyer who wants to enter the printing or office automation markets. The stock trades for just 11 times earnings and just 39 cents on the dollar of sales. The enterprise value-to-earnings before interest, taxes, depreciation and amortization (EV/EBITDA) ratio is below 3.