Lexmark Misses Q3 Profit Due to Inkjet Printer Sales

[Anonymous]

Lexmark Misses Q3 Profit Due to Inkjet Printer Sales

* Sees Q4 rev declining in mid-single digit range
* Sees Q4 adj EPS $1.15-$1.25 vs est $1.13
* Q3 adj EPS $0.95 vs est $1.03
* Q3 revenue $1.03 bln vs est $1 bln
* Shares down 6 pct

Oct 2011 – Printer maker Lexmark International Inc posted a lower-than-expected quarterly profit, hurt by a decline in cheaper inkjet printer sales, and it forecast a drop in fourth-quarter revenue.

The company, whose shares fell 6 percent in early trading, forecasted fourth-quarter adjusted earnings of $1.15 to $1.25 per share, with revenue falling 4 percent to 6 percent. Based on 2010 revenue of $1.10 billion, that would yield a 2011 forecast of $1.04 billion to $1.06 billion.

Analysts, on average, expect fourth-quarter earnings of $1.13 per share, on revenue of $1.03 billion, according to Thomson Reuters I/B/E/S.

Lexmark is focusing on selling its more expensive laser printers to businesses to counter a decline in sales of low-end inkjet printers to consumers as it phases out that business.

By focusing on enterprise clients, ranging from small companies to large government organizations and corporations, it can sell more toner and ink, which are high margin products that make up the bulk of its profit.

Apart from phasing out of inkjet printer business, Thailand flood and soft European and the United States markets are affecting them, said Jeffrey Fidacaro, an analyst with Susquehanna Financial Group.

Japanese rival Canon Inc said the Thailand disaster would likely lower its annual sales by $657 million.

The fourth-quarter outlook takes into account the effect of Thailand flood, Chief Executive Paul Rooke said, adding the company is evaluating any possible impact in future quarters.

Lexmark’s third-quarter laser printer sales were up 6 percent from last year period but inkjet printer sales were down 34 percent. The consumer inkjet business has been a drag on sales for the past several quarters.

The phasing out of the business should see sunset by the end of next year, analyst Fidacaro said.

For the third quarter, the company posted net income of $67 million, or 86 cents per share, compared with net income of $72 million, or 90 cents per share, a year ago.

Lexmark’s earnings were hurt by a net tax related charge of 2 cents per share.

Excluding items, the company earned 95 cents per share.

Revenue for the quarter rose to $1.03 billion from $1.02 billion a year ago.

Analysts, on average, expected third-quarter earnings of $1.03 per share on revenue of $1 billion.

Lexmark shares fell $1.83 to $29.44 on the New York Stock Exchange on Tuesday.

[Author]

October 27, 2011 at 8:58 AM