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 9:20:57 am Views: 42
  • #24255

    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