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January 31, 2006
Ink-o-dem Ready to Take a Bite out of Hewlett and Lexmark
The Wall Street Journal Reports: Even as computer prices have steadily dropped, the cost of one high-tech necessity has remained stubbornly high. Printer cartridges are so costly that printer giant Hewlett-Packard Co. has long made more than two-thirds of its profit from selling them. Now, in a move that could save consumers hundreds of dollars in replacement costs, several major retailers are starting to offer speedy refill services that replace the ink rather than the entire cartridge.
This picture shows the Ink-o-Dem. Walgreen’s is rolling out this service in half of its 1500 stores. Think what would happen when Wal-mart gets wind of this! Lexmark and HP can say goodbye to a big percentage of their profits.
HPQ had a great run over the last 18 months (16 to 32) and is meeting resistance around 31-32. The stock formed a bearish engulfing on 20-Jan and a dark cloud on 26-Jan. These are potentially bearish, but the stock has yet to fold and break even minor support at 31. I think this Ink-o-Dem could take the bid out of HPQ and at least stall the advance. There is nothing in the chart to show weakness yet, but I will be watching closely.
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Posted by Arthur B. Hill at January 31, 2006 06:31 AM