Having spent last week providing tech support -- and by tech support I mean both hand-holding and occasional scolding -- to a gaggle of nervous photographers at the Missouri Photo Workshop, I noticed a marked preference for the memory chips and card readers delivered by struggling Lexar Media
Today, that firm tried to beef up its street cred with high-end shooters by debuting a handful of new gizmos at the big annual photography shindig, Photokina, in Cologne, Germany. Among the innovative offerings were memory cards featuring a special corral for storing users' camera and caption settings; rugged, stackable card readers; and encrypted flash cards that will protect images from unauthorized access.
These products will probably please pro digital photographers. Stockholders shouldn't get too excited. In fact, they might be disappointed to hear about them at all. That's because it costs a few bucks to appease that small, professional market, and in the meantime, Lexar's been losing money on its consumer sales and seriously underdelivering for shareholders.
Its last earnings report showed just how tough it can be to play second fiddle in this industry. While larger rival SanDisk
Shareholders might see some hope in a partnership with Eastman Kodak
The bottom line is that Lexar's problems aren't related to innovation or product quality. The business is just bad. The company's relationships with flash suppliers and resellers put it in a precarious position. Shares have recovered some ground from their late-August swoon. But SanDisk, by pushing down flash card prices and making money on higher-margin products and IP licensing, is emulating McDonald's
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Seth Jayson still prefers good old-fashioned film. At the time of publication, he had positions in SanDisk, but no other companies mentioned. View his stock holdings and Fool profile here. Fool rules are here.