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 user 2008-10-23 at 10:46:17 am Views: 53
  • #20495

    Lexmark Ups Ink, Toner Prices; Citi Turns Bullish
    Lexmark (LXK) shares are on the mend this morning after Citigroup’s Richard Gardner upped his rating on the stock to Buy from Hold. His price target on the shares is $37, which is actually down a buck from $38.

    Gardner notes that the company has announced plans to follow Hewlett-Packard (HPQ) and raise prices on ink and toner by about 5%, a move which he says should have a significant positive impact on 2009 EPS. He says that while the inkjet business is “permanently impaired,” the company is executing well in laser printers, earning 15%-20% operating margins in that segment. Valuation, at 4x forward operating earnings ex net cash, “is extremely compelling,” he contends.Gardner trimmed his ‘08 EPS estimate to $3.85 from $3.91, but he upped ‘09 to $4 from $3.57.LXK today is up 55 cents, or 2.1%, to $26.26.

    Lexmark shares fall 11% as earnings disappoint
    SAN FRANCISCO — Lexmark International Inc. shares fell more than 11% Tuesday after the printing and imaging company reported a 19% drop in its third-quarter earnings and said business is likely to remain challenging in light of economic conditions through the fourth quarter.

    LXK 26.66, +0.15, +0.6%) shares ended the day down $3.28 to $25.71 after the company said it earned $36.6 million, or 42 cents a share, down from $45.2 million, or 48 cents, earned in the same period during 2007.Excluding restructuring charges and other one-time items, Lexmark said it would have earned 63 cents a share. By that measure, the company met the estimate of analysts surveyed by FactSet Research.Lexmark’s reported revenue of $1.13 billion, down slightly from the nearly $1.2 billion it reported a year ago.In a statement, Lexmark Chief Executive Paul Curlander said the company was facing “a more difficult global economic environment,” but that Lexmark remains focused on its strategy of targeting higher usage segments of the printing market.

    Lexmark said that during its third quarter, its business segment revenue rose 4% from a year ago to $760 million, but consumer sales dropped by 21% to $371 million. The company said the consumer segment declines were due primarily to a shift in business strategies and a slowdown in the inkjet market.For its fourth quarter, Lexmark estimates earnings, excluding one-time items of between 70 cents and 80 cents a share, while Wall Street analysts have forecast a profit of 82 cents a share.The company’s estimate excludes restructuring charges pegged at about 30 cents a share.Lexmark also forecast that revenue for the current quarter will de down from last year at a percentage rate in the “low-to-mid teens.