Question-and-Answer Session
Operator
(Operator Instructions) Your first question is coming from Tony Sacconaghi with Sanford Bernstein. Please go ahead.
Tony Sacconaghi - Sanford Bernstein
Yes, thank you. I just wanted to probe the investments in brand development and demand generation a little further, how long do you think you have to sustain these investments and how much of it is discretionary, i.e., advertising and promotion, that you could actually pull back?
And I think what would be helpful for us to understand that is, can you comment on where head count went year-over-year, and can you comment on advertising and promotion year-over-year?
Paul Curlander
Well, Tony, if we look at the year-to-year SG&A movement, I would tell you that about 2/3 of it is media and people, certainly more media than people in there. The rest of it is a long list of items of what you might call discretionary kinds of things.
I think from our perspective, it's very important that we step up these investments. We really feel that we've brought the product line along to a point where we have now filled in all the key gaps. We think that we're very well positioned against the competition.
We've completed the, the change on the inkjet portfolio by getting rid of the low profit sales from last year and we think with the launch of our new wireless line on the inkjet side, we think with the strength of our product line and services set on the laser side, that now's the time.
So, we think we've got the right mix of discretionary and fixed and, as John indicated, we've kind of stepped up and we're going to be about flat quarter-to-quarter.
Tony Sacconaghi - Sanford Bernstein
If I could just follow up, Paul, you had a year-over-year positive impact from your restructuring initiative. So if SG&A was up $26 million, X the restructuring initiative, it was actually up closer to $40 million.
So are you saying 2/3 of that $40 million incremental is media and people? And again, can you try and answer the question about whether head count is up or down versus last year?
Paul Curlander
Well, I think relative to the year-to-year bridge on the OpEx we definitely are getting an improvement from the restructuring, that restructuring improvement was split between cost of goods sold, as well as OpEx.
So I think the OpEx is if you look at the $80 million plus savings for the year, net that back to one quarter, I think there's a much smaller number you may be thinking relative to the impact in the first quarter.
I think that as we go forward in time, the overall head count increase, we prefer not to talk about that, Tony, just relative to competitive issues, but it was not the bigger piece of the SG&A increase on a year-to-year basis.
Operator
Thank you. Our next question is coming from Philip Olsen with UBS. Please go ahead.
Philip Olsen - UBS
Yeah, thanks for taking our question, actually, a quick one. In terms of kind of priorities for free cash flow over the balance of this year. If you could maybe just articulate how you envision spending cash flow?
And as it pertains to the cash you made a comment, that the majority of the cash is held overseas, does that then restrain your ability to pursue additional share repurchases?
And then finally how do you think about addressing the refinancing of the 2008 bond maturity, is that something we just think you should pay out of cash on hand? Or would you look to refinance that in the debt market? Thanks.
John Gamble
Okay. In terms of cash flow, and it sounds like specifically around repurchases, right. So we've talked about this before, right? Effectively what we have done historically is we've repurchased shares out of cash available in the U.S., and as cash is now in the U.S. available now is at a relatively low level, then repurchases, historically would have been done out of that cash available or the cash generated in the U.S.
We don't forecast the activity, and so at this point we can't really go into more detail in terms of what we do going forward. But that's been our historic practice. We also have historically, we've specifically indicated we wouldn't necessarily add debt to do that, although it's something that we certainly revisit, and we revisit our entire purchase plans frequently with the Board, and we do that annually.
So that's something we do look at frequently. Your last question was around the refinancing, the 2008 debt. Not something we're really at this point going to talk about. It's $150 million, and as we get into 2008, we'll make decisions as to how we're going to specifically do that.
Philip Olsen - UBS
Okay. Thank you.
Operator
Thank you. Our next question is coming from Richard Farmer with Merrill Lynch. Please go ahead.
Richard Farmer - Merrill Lynch
Thanks. Paul, two questions please. First, on the inkjet supplies decline, you mentioned the effect of the declines in the prior period hardware sales, is that really the primary explanation?
Are there any other factors that you could provide color on, anything related to ink usage per install device or a mix of cartridge yields or any other factors there?
And then secondarily, on hardware pricing. Can you quantify more specifically, what you described, as I think fairly aggressive pricing in any rough percentage decline terms or how much worse was that relative to your expectations, which I believe included some anticipation of price competition, and in your outlook, what are you assuming in pricing going forward? Thanks.
Paul Curlander
Okay, Richard, relative to the inkjet supplies decline, I think there's a number of things going on there, I think clearly one of the major factors is the install base decline, and this is due to the reductions in inkjet units. Certainly 2006 was a big factor, but you have to look back to declines in the branded units in years before that as well.
Currently we're also continuing to see an impact on the mix in price. We haven't talked about that maybe in a few quarters, but that's certainly out there the mix between the standard yield cartridges, and the high yield cartridges, the mix between brand and OEM continues to have an impact.
And certainly we're very cognizant that loyalty and use of third party remands maybe a factor in here as well. We think the dominant factor certainly is the install base, I would also list the mix and price as an issue here as well, and loyalty, we're always looking at. On the hardware pricing, let me kind of characterize that in terms of the average unit revenues.
On the laser side, we indicated the average unit revenue was up year-to-year 11%. I would tell you there was a huge mix effect on that because of the availability issue we had on the low ends.
So we got a lot less low end products, we also had very strong sales on the high end, on the color laser, the color laser MFP. So the pricing impact is visible in there but only because the mix is actually much bigger than this plus 11%.
We're seeing very aggressive pricing; particularly in enterprise bids around the world, these things are being aggressively bid on by all the competitors, we're seeing a lot of aggressive pricing and promotion in small and medium business, obviously, low end mono lasers, color lasers continue to be aggressively priced in the marketplace.
On the inkjet side the average unit revenue declined 5% and again to characterized that we had a huge mix improvement between single function all-in-ones in the quarter. On a year-to-year basis we had strong growth in branded all-in-ones, we continue to see a significant decline in the single function.
Obviously the mix between brand an OEM played a role in here as well, but a lesser role than the mix between single function and all-in-ones, and that decline was pulled down off of a positive mix shift, was pulled down to a minus five.
If you look quantitively on the inkjet all-in-ones, on the three-in-one category, which is really our highest volume category now after the movements we've had over the last five quarters in inkjet. We're probably looking at a 30% year-to-year decline in the average unit revenue in that category. So a significant impacts out there in the market.
Richard Farmer - Merrill Lynch
Okay. Thanks, that's helpful.
Operator
Thank you. Our next question is coming from Laura Conigliaro with Goldman Sachs. Please go ahead.
Laura Conigliaro - Goldman Sachs
Yeah, just a couple things, really about your channel inventories, you talked about your higher DSOs. Can you give us more color on what's going on as far as channel inventory build, and what your expectations are in the June quarter?
And then just a follow-up clarification, which is that given the difference in the state of your branded business and your OEM business. Can you update us on the percent of your business approximately that is branded versus what it was, say a year ago?
Paul Curlander
Okay, Laura, on the second question, I don't think there's a significant movement in the percent of OEM in our business versus a year ago that would be a revenue statement looking at the total company.
One of the things that you need differentiate apart, as I say that is that usually when we talk about OEM weaknesses we're focused on hardware unit declines on a year-to-year basis, obviously, the supplies from OEM may be moving a slightly different direction.
On the channel inventory side, let me just focus in on the supplies channel inventory, because that's what we mentioned in the remarks. What we saw on laser supplies, it was really a very strong quarter, and first quarter compared to our expectations, which is good news because that follows the quarter and fourth quarter, we had very strong results versus our expectations. In both the fourth quarter, and the first quarter we saw more end user demand than we would have predicted from our models.
So that's also a good thing, I think that in the first quarter that we also saw some build in channel inventory in our estimated channel inventory, which is something we would preferred not to see, but apparently it did occur as we look at it after the fact. As we look at the inkjet side, we saw, again, a bad one expectation for inkjet.
As we look at channel inventory estimates after the fact we see some slight build there, not as much as what we see on the laser side. We would expect in the second quarter to see some shrinkage particularly in the laser channel inventory now, that's very hard to call, because we don't control that inventory.
But we just think that what went up in the first quarter could very possibly come out in the second quarter, and we've kind of put that into our outlooks as we go forward. It was not a huge amount, I mean, we're not talking multi-weeks or even a week in inventory, but it's not insignificant, so we mentioned it.
Operator
Thank you. Our next question is coming from Bill Shope with J.P. Morgan. Please go ahead.
Bill Shope - J.P. Morgan
Okay, great. Thanks. I guess my first question is on the laser unit weakness. If the mono product shortage was the key reason for that decline we saw this last quarter should we expect positive laser unit growth in 2Q?
And then my next question is a clarification. I thought I heard you mention a patent dispute issue that impacted profits during the quarter. But I didn't see that in the release. Can you give us some color on that and maybe quantify it?
Paul Curlander
Well, let me just mention the patent dispute, and we can't quantify it for you for numerous reasons relative to the agreement. But basically, we had a lawsuit with IP Innovations that we settled during the quarter.
Like we encounter with many different patent disputes, whenever we do a settlement. It's a business decision as to what it costs us to go forward versus what it costs us to come to a resolution and what's the best conclusion for Lexmark.
In this case, settlement, we thought, was the right answer, and we went ahead and did that, obviously an impact in the quarter. Relative to the laser shortage, clearly the biggest volume segment that we have in the laser market is low-end mono lasers.
As I look at our estimates to the amount that that we think we lost in the quarter because of disruption in supply, that was a difference between having negative versus taking us positive. We certainly would expect to see a bounce back in low-end mono lasers, as we go into the second quarter. We certainly would expect to see continued strong growth in color lasers and laser MFPs.
And I'm certainly hoping to see laser unit growth to be there on the branded side in the second quarter. I am a little concerned about how quickly we'll see the momentum build back in the low-end mono after the disruption that we've had in the category.
And it's also a very aggressive price category with a lot of competitors. So we'll see how that plays out, but we would expect to see it bounce back there, as well as continued strength on the branded side in both the color laser and laser MFPs.
Bill Shope - J.P. Morgan
Okay. Thank you.
Operator
Thank you. Our next question is coming from Richard Gardner with Citigroup. Please go ahead.
Richard Gardner - Citigroup
Thank you all. I have a couple of questions. First of all, it looked like based on our model that hardware gross margins were probably down roughly 500 basis points year-over-year and maybe 800 basis points to 1000 basis points quarter-over-quarter.
Despite the fact that you are seeing a positive mix shift within hardware toward, I would think better margin products with the exception of color laser, which I realize is very much racer blade razor.
So, can you talk about the relative impact of APCLCM and the aggressive hardware-pricing environment on the margins in hardware? And can you also give us some sense of whether declines in supplies margins contributed to, to what we saw in the gross margin line? Thank you.
Paul Curlander
So, in terms of APCLCM, APCLCM was a small impact specifically in the first quarter, but as we talked about in January, there was a benefit to APCLCM in the fourth quarter. So, quarter-over-quarter, because we lack that favorable benefit in the fourth quarter of '06, it was a negative impact on us. It was a negative impact on us if you're comparing margins quarter-to-quarter.
Richard Gardner - Citigroup
Was that a more significant impact in the pricing environment, or was pricing more significant, John?
John Gamble
I think pricing was an impact to us as we came from the fourth quarter into the first quarter. I also think, your question on supplies margins, we did see some erosion on supplies margins, a lot of it around the price and mix in the inkjet supplies that we mentioned a little bit earlier in the call. On a year-to-year basis, I don't believe we saw much change in the supplies margin.
Richard Gardner - Citigroup
Okay, so, when you say supplies margins were down, you're talking just primarily on a quarter-to-quarter basis?
John Gamble
Yes, sequentially. Sequentially, in terms of the mix, mix and price impact, standard yield versus high yield, OEM versus branded.
Operator
Thank you. Our next question is coming from Ben Reitzes with UBS. Please go ahead.
Ben Reitzes - UBS
Good morning. Thank you. Could you just talk a little bit more about the OEM drag, I know you don't like to cover this, Paul. But, it's so significant it seems to your results and the OEM drag in the quarter, but then you also have some issues with the IBM relationship and what happened there.
I mean is there any way we can just get any color from you on when the OEM declines just stopped being a drag and then I have a follow-up?
Paul Curlander
Well. Ben, I think it's a good question. Because, I mean the reality is what's going on is the progress we're making on the branded side is being covered up by the decline that we're seeing on the OEM side.
Clearly, we have a number of OEM customers, clearly, I can't talk about any of the OEM customers. I think that obviously, investors probably know who the bigger ones are. The reality is that OEM as a whole, it was a weak 2006 with hardware declines. What's a little frustrating as we come into 2007, we're seeing those declines continue and actually increase as we, certainly as we look into the second quarter.
We think that'll be even weaker year-to-year than what we saw in the first quarter. I think that the way to think about this is that, with OEM, this is what happens to you in the business. You cycle up, you cycle down. Hopefully, we'll cycle up at some point, but that may or may not happen. At the rate at which we're seeing declines, it certainly starts to compound pretty quickly as you go from year-to-year to year-to-year.
I think the key issue for us is to continue to drive on the branded side. Obviously, looking back at 2006 we had a good year branded side, on the lasers. Given that we walked away from 20% of the inkjet side, we also had a good year in the part that we weren't walking away from and we expect that to start to show here as we move through the year in 2007.
So, we feel pretty good about the branded side. Obviously, inkjet OEM is a big factor here, but as you pointed out the laser side has some drag as well on a year-to-year basis from what we had.
Ben Reitzes - UBS
And then just with regard to the patent dispute, I just wanted to ask in a different way, is it the fact it's not called out mean it's not material to the, to perhaps your margin or the cash flow, which was a little weak in the quarter. But, I assume that you didn't call it out, meaning that it wasn't material to, in terms of cash flow hit or a margin hit in the quarter, or is that not the case?
John Gamble
Well, it certainly impacted margins and it certainly was a cash flow impact. It wasn't a major impact, but there certainly was an impact in the period.
Operator
Thank you. Our next question is coming from Katie Huberty with Morgan Stanley. Please go ahead.
Katie Huberty - Morgan Stanley
Thanks. Good morning. Just quickly to follow up on the OEM business; did the mono laser disruption impact OEM relationships or just the branded business?
Paul Curlander
The major impact was on the branded side. We work hard to keep our OEM customers whole whenever we have any type of availability disruptions so, we feel pretty good about what we're able to do with the OEM customers.
Katie Huberty - Morgan Stanley
And then, just quickly on the inkjet side of the business, it appears you're adding the wireless capability for relatively low incremental costs. Is it fair to think of the new inkjet printers as lower gross margin, but with the hopes of incremental supplies usage longer term?
Paul Curlander
Well, we obviously never comment on the gross margins as of part of the product line. But, I would tell you we're certainly trying to add it with a minor amount of incremental price. Cost as the volume grows over time, we're looking to get those costs down.
We do believe that wireless will drive incremental usage in the marketplace. Certainly, some of the experiences in the tests that we've done have indicated that there can be more usage driven off of a wireless device, but obviously we'll have to see that as we go forward in time. But that's our hope.
Operator
Thank you. Our next question is coming from Robert Semple with Credit Suisse. Please go ahead.
Robert Semple - Credit Suisse
Sure. Thanks. Question on the OpEx, obviously, we know what's happening in the current quarter going forward, but how should we be thinking about OpEx growth for the balance of the year?
It's going to grow kind of mid teens this quarter versus negative revs, and just can you kind of think about or let us know what your thoughts are how that trends throughout the balance of the year?
John Gamble
Well, we don't really give specific guidance beyond the second quarter, but if you do look at fourth quarter to first quarter to second quarter, the OpEx levels have been relatively stable, right, if you take a look across those periods.
Robert Semple - Credit Suisse
Okay. And if you exclude the OEM business, do you think you gain to maintain or loss share in your branded inkjet business in the first quarter?
Paul Curlander
Well, first quarter is a little hard to know, because we haven't seen the market data. Let me answer the question a little bit more generally and then give you some thoughts about the quarter.
As I look back at 2006, you look at the data from IBC, which would say that the inkjet market was about flat. It would say that the mono laser market was up about 8% year-to-year, color laser was up about 15%, laser MFPs up 25% to 30%.
As I look across those laser numbers, the 8% in mono, the 15% in color, the 25% to 30% laser MFPs, Lexmark grew much faster than that. So, we gained laser share on the branded side across those categories in 2006.
On the inkjet side, I would tell you that obviously, since we were down 20% year-to-year on units and units were about flat to slightly down on the market, we lost share. We believe that we lost about four points of share year-to-year, but I would tell you a couple of interesting things about that.
First, as you look at the split between OEM and branded, we think three of those four points of share loss were on the OEM side. We think there was only one point of the share loss on the branded side, and this reflects the growth we had in the other piece of the business and the sales we did not discontinue.
So, we view that, we view that to be, to be good news, as we also had on the branded side good growth last year. Actually, yes, very good growth last year in the inkjet all-in-ones, so we may have come very close to holding market share on inkjet all-in-ones on a year-to-year basis. Currently we lost branded inkjet share on single functions because of the discontinuation of bundles.
As we look at first quarter, it's hard to know exactly what the market did. We have some preliminary data out of people like MBD for January and February in the U.S. indicating sellout was up 14%. That doesn't cover the whole market. We think when you roll the whole market in you're going to get a lower growth number than that.
Preliminary data from the weekly reports in March indicates that maybe March was down 7%. So, again, a partial view of the market would say maybe up mid-to-high single-digit. But, we think when everything's in, you're going to be looking at a much lower growth number in the U.S. than the first quarter. Obviously, there was a little bit of a vista effect in retail in the first couple months.
As we look at that, we think that on the branded side, it's very possible we held market share in the first quarter. We clearly think we lost market share on the OEM side in inkjet.
As we look at lasers, clearly mono laser was a little bit problematic for us in the first quarter. The market data is kind of mixed. There's some data out there from, from MPD that indicates that maybe the first quarter was a little stronger than the fourth quarter.
There's data that we've seen from U.S. distributor reports, and these are both U.S. statements, that indicates that the first quarter was weaker than the fourth quarter. It's hard for us to know, I would say with the exception of the mono laser issue we had with the low-end monos, we had strong growth year-to-year in both color laser and laser MFPs.
I would expect that we gain share in color laser and laser MFPs on the branded side. I would expect that low-end mono laser we probably lost share because of disruption, but again, we don't have that market data.
Operator
Thank you, our next question is coming from Shannon Cross with Cross Research; please go ahead.
Shannon Cross - Cross Research
Good morning, I had a question with regard to inkjet cartridges. Not just sort of the mix that impacted I guess the margins, as well as, pricing in the most recent quarter. But as we look forward to some of your rebate options that you're doing.
I'm just curious as we, how we should think about it because from what I understand the rebate cartridges. What the 23, 24, 28 and 29 will be sold at a what about a 4% discount to sort of where things are right now and sorry $4 discount relative to where things are right now.
And therefore, as these start to hit the market, what should we think about sort of ASPs and margins and net on those products. Obviously long-term would benefit from the after market standpoint. But what's the near term impact?
Paul Curlander
Well, Shannon I think you touched on all the relevant points. I think to it, I think that with the launch of the return cartridges in our new line of inkjet products. Obviously, we're very focused on working just like we have on the laser side to get returns back to Lexmark, so that we can then take those returns and start to get more into the remanufacturing business.
I think it's important to recognize, and I think you're on this point that we are giving customers an option. Right so we'll have the lower price cartridges that have the restriction, in terms of the patent license and then we'll have the higher price cartridges that have no restriction. If anybody wants to buy those, so that mix as we go forward in time.
We're obviously going start driving a mix more towards probably the lower price if the experience is similar to what we've seen on the laser side, so that'll be some near term change from a mix perspective.
But longer term, we certainly believe that as we get cartridges back as we can get more into the after market reman business, that this will be a good thing for Lexmark and allow us to start to compete with those third party offerings.
Shannon Cross - Cross Research
Okay. And then a follow-up because you say as you get more into the reman business. Would we expect to see maybe a two-tiered pricing strategy for you over time where, perhaps you would sell a remanned cartridge for even lower than the returned pricing, or the rebate pricing?
Paul Curlander
It's hard to say what you might see from us over time, I think it's, on the laser side what you see us doing is obviously we're selling remans into large accounts at prices below our return cartridge pricing.
So there's no question we're doing that today, on the inkjet side. It certainly is possible we might get there; we also are very interested in private label deals as well. So, I think both of those are possibilities; we obviously need to do a lot of work to get those returns up. So we can start to get that volume flowing.
Operator
Thank you. Our next question is coming from Bill Hand with Bear Stearns; please go ahead.
Bill Hand - Bear Stearns
Thanks Paul. If end user demand on the laser side has exceeded your model for two quarters now. Why aren't you more positive on the potential growth there particularly in light of what you've seen around color and MFP; and then just another quick question, just any thoughts on mem jet and how disruptive that might be to the market?
Paul Curlander
Well, on the color laser side, on the laser supply side. I think it's a great indicator of the momentum that we've built driving our laser units. Particularly on the branded unit side over the last three or four years, and we're delighted to see the stuff, see the end user demand exceeding what we have in our models.
I think that color is certainly is a big factor in that certainly pushing us up; I think our services business also helps us with that, clearly in the second quarter. We're looking at some potential shrinkage in the channel. We take these overages we crank those into the model, so our outlooks for the second quarter certainly reflect the fact that we had stronger end user demand than the last two quarters.
I would say that we're cautiously optimistic that maybe we'll see some more as we go forward. But we think the model should have taken into account those adjustments from the last two quarters. And we're going to see a little bit of shrinkage all that said, we're expecting to have good growth in our laser supplies in the second quarter.
So nothing we've said should take away from that, that we've had good growth in our laser supplies all through 2006; certainly very strong in the fourth quarter. Certainly very strong here in first quarter, and we expect to have good growth in the second quarter as well.
Bill Hand - Bear Stearns
Just to follow-up. Any thoughts on mem jet.
Paul Curlander
Well mem jet. There's not a lot I can say about that, the Silver Brook technology has been around for a long time. I think clearly here recently they've said some things that look like there a little different from some of the things that we've seen from them historically.
I would tell you that we certainly go out and look at everything that's in the market to understand what it is and. But we never talk very much about what we think after we take a look at it.
I really don't see much impact to Lexmark from mem jet, really kind of for two reasons, one is their they have not commercialized the technology and that's a nontrivial thing. But that may just be a timing thing, who knows when they might get that done.
Secondly, I have a hard time believing from what we've seen that this is going to, this is going to compete in the price range where Lexmark competes today. It just looks like higher end stuff, from what it is that we do in the market; so this is why it's not very high on our list of potential impacts to us in the marketplace.
Operator
Thank you; our next question is coming from Bill Fearnley with FTN Midwest. Please go ahead.
Bill Fearnley - FTN Midwest
Yes good morning, two questions if I could on the pricing side, when you talk about price aggressiveness. Is it product pricing or is it rebates and bundles and discounts that's putting the most pressure on pricing; and then specifically in the laser hardware-pricing trend.
Any updates to I think it was Paul's comments at the Analysts day regarding the razors and blades movement in the business model on the laser side; if you could help us out on pricing that would be helpful. Thanks.
Paul Curlander
Okay, well. Bill, relative, when I talk about pricing I really roll in everything, and so, it's movement in the price itself. But it's also promotions that are done, bundles per se. We've kind of changed our bundle policy somewhat. So that's maybe a little less of a factor for us, but on the promotion side. It's really pretty aggressive out there.
And you can see it; all you have to do is take a look in the Sunday circulars out at retail, you see huge promotions going on a regular basis every week. And this is becoming just kind of the usual cycle but right now we see the market as particularly aggressive in terms of promotions, family ads, as well as, individual product promotions.
As well as people moving through end of life stuff that's out there from prior generations, so a lot of it going on. A lot of it I think due to the fact that the inkjet market didn't have any unit growth in 2006. And people have capacity and so this is just a cycle that you start to see.
Over on the laser side, I think the issue again. We have a pricing issues out there as to what's going with low end mono laser, color laser and enterprise bids, very aggressive across all those things; but the point I think you're on is that we see a movement in the laser model because historically lasers have been different than inkjet where people have made money on the hardware. As well as, making money on the supplies.
And what we see certainly with the color lasers. And I would say to some extent with the low-end mono lasers is we see people moving more towards the inkjet model; certainly, the color lasers are there; we think some models within the low end mono range certainly as you get down sub $150, you start to see that as well.
And so, this is having an impact in the business model over on the laser side, over the life of the product this is not a problem because certainly these products continue to be very profitable and the business overall continues to be profitable.
But clearly to the extent that you get negative hardware margins in the quarter that you sell these things. You see negative impacts by selling more, more hardware, and we're obviously very focused on trying to sell more hardware.
Bill Fearnley - FTN Midwest
Any particular competitors you wanted to call out here, you've done that in the past, are you seeing new entrance into new categories putting the most pressure on the pricing. Or is it the incumbents that you see on a more on a regular basis.
Paul Curlander
I think most the action is with the incumbents. I think that some of the people who you might put in the new entering category. They're in, so they're kind of there and I think, over on the inkjet side we're certainly looking across HP, Brother and Cannon in addition to Epson.
But you also have to go over on the laser side look beyond just HP, and be looking at people like Konika, Minolta and Epson and Samsung there because there's a lot of impact from them as well.
Operator
Thank you. Our final question will be coming from Chris Whitmore with Deutsche Bank; please go ahead.
Chris Whitmore - Deutsche Bank
Thanks; to follow-up on that last question. Wanted to ask about your shelf space at retail. Can you give us an update as to what your shelf space did during the course of the quarter, and related to that. Are you seeing any impact from Kodak's entrance in the three-in-one and four -in-one space on that shelf space in overall pricing to the channel. Thanks a lot.
Paul Curlander
Okay, well, I think relative to Kodak, there's not a lot we can say about it there, they're right now only at Best Buy as far as we know; we've not lost any shelf space at Best Buy as a result of their entry. So, I would say there's no impact to us our models continue to be there and continue to sell, I think shelf space at retail for us has been an interesting story over the last four to five quarters.
And I think, it's turning into a positive story for us, last year as we walked away from the low profit inkjet sales. We saw a drop in our shelf space as some of the products fell off the shelf, and that was certainly an impact to us; as we went through the year, we've been getting shelf space back in different locations in both the CES and LSS, which have been helpful to us.
And as we ended the year, we really were, had recoveries throughout most of the shelf space that we had lost from the discontinuation of low profit sales, it wasn't all in the same place. But we had overall I think had recovered those number of SKUs.
Now as we look forward in 2007, we really think that this wireless launch is going to have significant impact on our shelf space. With the commitments that we have from retailers we're going to see an improvement in their shelf space from the spring to the fall of this year as we roll out the rest of the line; and it's 15% to 20% improvement in retail shelf space from where we are right now in the U.S.
And we're going to see improvements in all categories mass, CES and LSS. So, we think we're building a good story here on retail shelf space.
Operator
Thank you; that does conclude today's teleconference. You may disconnect your lines at this time. And have a wonderful day.
Copyright policy: All transcripts on this site are copyright Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.
THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.
- To read the full transcript on Seeking Alpha, click here »
