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Lexmark Q3 sparks printer supplies concern
Lexmark has sparked fears over printer supplies sales after it warned that it would miss Q3 earnings estimates because of slowing sales of ink cartridges. The company made the announcement on the reporting of its Q2 figures which showed that printer supplies sales had helped it to a 14% rise in profit in the period.
Lexmark posted net income of $101.7 million, or EPS of $0.77, compared with $89.1 million, or EPS of $0.67, in Q2 2002. Laser and inkjet supplies rose 11% to $630 million and now account for 56% of Lexmark’s total revenue.
Overall sales climbed to $1.12 billion up from $1.06 billion in Q2 2002. Despite positive Q2 results, Curlander warned of a tricky Q3 ahead. He said: “”We continue to be cautious, due to softness in corporate and consumer spending, and aggressive pricing competition. In the third quarter of 2003, we expect a year-over-year revenue growth rate in the low- to mid-single digits and EPS of 63 to 73 cents, compared to 70 cents in Q3 2002.”
Lexmark’s share price dropped $14.10, or 19%, on 21 July after warning that slowing sales of ink cartridges would hit Q3.
Recent moves by Staples and Office Depot to boost promotion of their private label ink cartridges have added to the slowing demand. In April, Office Depot launched Ink Depot shops within all of its North American stores with the support of radio and newspaper advertising. (see ‘empty promise?’, page 37)
Lexington (KY)
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