Printing is not Dead

HP AND XEROX AREN’T QUITE THE BEACONS OF INNOVATION THEY ONCE WERE, BUT THEY’VE STILL GOT A GIANT PILE OF MONEY WORTHY OF A TAKEOVER FIGHT

- AUSTIN CARR AND NICO GRANT

HP’S 63 TRI-COLOR INK CARTRIDGE retails for $28.99 at Staples. Stuffed with foam sponges drenched in a fraction of an ounce of cyan, magenta, and yellow dyes, this bestseller, model No. F6U61AN#140, can spray 36,000 drops per second in the Envy printers made by HP Inc. The 63 Tri-color cartridge may not look like much, but that ink, which needs a refill every 165 pages, is ridiculously valuable. HP’s printer supplies business garnered $12.9 billion in sales last year, and the printer division overall represented 63% of the company’s profits. Here in the year 2020, proprietary ink cartridges remain important enough to spark a fight worth at least $35 billion.

Xerox has been trying to buy the much larger HP for what the target says is a laughable bid. On Feb. 24, HP Chief Executive Officer Enrique Lores moved to protect his hold on F6U61AN#140 and its toner brethren. During his report on the company’s latest quarterly earnings, which met Wall Street’s expectations, Lores announced that HP would triple its share buyback program to $15 billion over three years as part of an effort to fend off the hostile takeover. While Lores said he was open to exploring new merger frameworks, he dismissed the size and technology of Xerox Holdings Corp. and stressed that HP already had a winning strategy.

“I am pumped up,” the CEO tells Bloomberg Businessweek in an interview shortly after the earnings call. “We have a great plan.”