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Lexmark (LXK - Analyst Report) dished out $31.5 million for San Francisco-based Twistage and Seattle-based AccessVia in what appears to be an attempt to diversify away from its hardware business.

Both acquisitions bring specific cloud capabilities that could reduce the company’s dependence on its hardware business and enable it to develop more contemporary offerings.

Twistage offers a pure cloud software platform, which help companies to manage video, audio and image content. This expertise will help Lexmark in bridging the technical gap in its system.

AccessVia offers signage solutions, which helps them to create and produce retail shelf-edge materials, on a single platform.  Using this technology, one can take signatures in different output devices, which can be published in different digital signs or electronic shelf tags.

Moreover, the company’s software works on prints on-demand, especially in stores as well as on more traditional monochrome and color laser printers. This apart, it also functions on smart multi-function products and handheld devices, or centrally in high-speed production print facilities attracting customer attention.

AccessVia, together with Lexmark's managed print services (MPS) will offer efficient solutions for the print and document process market. We believe that the technology acquired will support Lexmark’s MPS business.

A focus on cloud-based technologies could lead to the development of higher-margin software-related products and services. The resultant revenue growth could even offset the revenue declines in the hardware business.

To improve its clinical content and Electronic Medical Records (EMR) business, Lexmark acquired Acuo Technologies LLC. in January 2013. Lexmark has always been active on the acquisition front. The company is making sustained efforts to improve its revenue model by focusing more on software than hardware. This was clearly the rationale behind its last five acquisitions.

The strategy to grow via acquisitions seems to be appropriate, yet concerns regarding companies across the globe adopting the paperless office concept remain. This new concept might have an adverse effect on Lexmark’s traditional printing business.

Moreover, the growing availability of low cost ink and consumables are pressures on its ink and cartridge business, which is already in the middle of a price war with players such as Canon (CAJ - Snapshot Report) and Hewlett Packard Company (HPQ - Analyst Report).

Lexmark carries a Zacks Rank #3 (Hold).

Another company, Symantec Corp. (SYMC - Analyst Report), with an Earnings ESP of +5.88% and Zacks Rank #1 (Strong Buy), appears impressive.

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