LEXMARK BUYBACKS AT ISSUE

[Anonymous]

Lexmark buybacks at issue
Lexmark International Inc. has bought back more than 31 million shares since January 2005, reducing its outstanding share count to 100 million at the end of September.A Goldman Sachs analyst asked company executives during a recent conference call for their views on how the buybacks might be affecting stock liquidity, a measure of how easy it is to buy or sell a share without affecting the stock’s overall price.Liquidity “really has to do with the extent to which the stock gets traded in the market, and first of all how many shares are out there and how frequently they turn over,” said University of Kentucky finance professor Donald Mullineaux. “The concern becomes what’s called thinly traded stocks, which means there’s not a whole lot of buying and selling activity.”What happens with those thinly traded stocks is if large orders come in one way or the other, it tends to move the price a lot more.”That means prices could soar on good news or plummet on bad.Lexmark’s chief financial officer John Gamble Jr. told analyst Laura Conigliaro that “we don’t see an impact in liquidity and don’t believe we’re in a situation where a lower share count is currently an issue.””Obviously, if it started to become one, we would have to do something about that,” Gamble said. “But at this point in time, we don’t think there’s an issue.”Lexmark officials declined further comment for this article, and Conigliaro was not available for comment, a Goldman Sachs spokeswoman said.During the conference call, Gamble said liquidity concerns would not prevent the company from continuing to buy back shares, though he did not say whether the company would indeed continue buybacks.The company has $600 million remaining on its current share repurchase authority.With that, the company could buy back close to 9 million more shares based on Friday’s closing price of $66.82.

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November 22, 2006 at 2:29 PM