EXPENSIVE SUPPLIES HELPS LEXMARK POST 46% 4Q PROFIT JUMP

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EXPENSIVE SUPPLIES HELPS LEXMARK POST 46% 4Q PROFIT JUMP

 user 2011-02-03 at 9:19:16 am Views: 43
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    http://online.wsj.com/article/BT-CO-20110201-713017.html

    EXPENSIVE CONSUMABLES HELPS LEXMARK POST 46% 4Q PROFIT JUMP
    NEW YORK–Lexmark International Inc.’s fourth-quarter earnings surged 46% on fewer charges and improved revenue, as the company benefited from businesses buying its laser printers and print-service plans.The Lexington, Ky., company also issued an optimistic first-quarter outlook, prompting shares to jump as much as 10% on Tuesday.Lexmark–as with other technology companies, including rival Xerox Corp.–has benefited from businesses spending on technology upgrades after delaying these purchases during the economic downturn. Lexmark’s prospects started brightening in the fourth quarter of 2009 when it posted its first year-over-year profit growth after two years of declines.”Our business is seeing the positive impact in the key strategic investment in technology and services along with the manufacturing and support infrastructure reductions we have made over the last several years,” Lexmark Chief Executive Paul Rooke said during a conference call with analysts. Rooke took over from longtime CEO Paul Curlander, who plans to retire in the spring.World-wide information-technology spending is forecast to increase 5.1% to $3.6 trillion this year, according to market-research firm Gartner Inc.For the first quarter, the company expects per-share earnings of between $1.18 and $1.28 on revenue growth of about 1%. Analysts polled by Thomson Reuters were looking for a per-share profit of $1.14 on 1% revenue growth to $1.06 billion.

    Lexmark shares, which have nearly tripled since July 2009, recently rose 9.6% to $38.20.S&P Equity Research analyst Tom Smith upgraded his stock-investment rating on Lexmark shares to buy from hold. He said Lexmark is making progress in moving toward more value-added products, including software, which will help to offset competitive pressures in the printer industry.

    Lexmark is starting to reap benefits from its acquisition of Perceptive Software Inc. for $280 million last May. The deal allows Lexmark to offer a software platform as a core component of its existing services.”While Perceptive Software only represents about 2% of our fourth-quarter revenue, we expect it to grow faster than the other parts of our business and become a larger share of our mix over time,” Rooke said.For the fourth quarter, Lexmark reported a profit of $87.6 million, or $1.10 a share, up from $59.8 million, or 76 cents a share, a year earlier. Excluding restructuring and acquisition charges, per-share earnings rose to $1.29 from $1.16. Revenue increased 3% to $1.1 billion.

    The company in October projected adjusted per-share earnings of between $1.03 and $1.13, topping estimates at the time, on revenue growth in the low-single digits on a percentage basis.Lexmark also said the impact of currencies on revenue was “relatively flat” in the fourth quarter. By contrast, competitor Xerox’s fourth-quarter results and 2011 outlook were hit by currency concerns. Xerox said last week it continues to see headwinds from currencies, including a strong Japanese yen against the U.S. dollar.

    http://online.wsj.com/article/BT-CO-20110201-713017.html