Dragged down by tax issues and a decision last year to end its declining inkjet operations, Lexmark International reported lower-than-expected fourth-quarter and annual earnings Tuesday.
The company’s fourth-quarter sales fell 9 percent to $967.4 million from $1.06 billion in the same period a year ago.
Net income fell to $6.3 million, or 10 cents a share, from $69.3 million, or 94 cents a share in the same period a year ago.
Excluding one-time restructuring and acquisition charges, earnings per share would have been 61 cents in the fourth quarter. Analysts, though, were expecting 90 cents a share using that measure.
Earnings declined by 25 cents per share because of tax issues, according to a company statement. That included 16 cents per share related to sales shifting toward countries with higher tax rates. The additional drop of 9 cents per share occurred because a U.S. research and development tax credit was not approved in time to boost 2012 results.
In a statement, CEO Paul Rooke noted that revenue in the fourth quarter was higher than the company expected and Lexmark also continued to see growth in its burgeoning software division.
The quarterly results continued to illustrate Lexmark’s strategic shift as it sheds the less-than-profitable inkjet offerings and adds to its highly profitable portfolio of software products.
Lexmark announced in late August that it would gradually shut down its small inkjet operations, which accounted for 15 percent of overall revenue in the fourth quarter. The revenue from those operations fell 26 percent year over year.
The move came a few years after the company stopped producing inkjet printers aimed at home consumers because customers weren’t printing enough to meet profit expectations. Instead, the company had used the inkjet technology to complement its laser printer lines aimed at businesses.
But the move to inkjets for businesses wasn’t profitable enough, leading to the decision to lay off 1,700 employees worldwide during the next couple of years. The bulk of those being cut, 1,100 people, are overseas workers employed in the production of inkjet cartridges. An additional 350 are full-time employees at Lexmark’s Lexington headquarters, where 200 contractors also are being cut.
The majority of the restructuring affecting inkjet is expected to be completed by the end of 2013.
For all of 2012, sales fell 9 percent to $3.8 billion from $4.2 billion in 2011. Net income was $106.3 million, or $1.53 a share, down from $320.9 million, or $4.12 a share.
Excluding one-time charges, 2012 earnings per share would have been $3.51, lower than the $3.78 expected by analysts.