DOW JONES NEWSWIRES
Lexmark International Inc.'s (LXK) third-quarter profit slumped 73% on restructuring costs as the printer maker reported core results far better than the company's downbeat forecast on stronger-than-expected demand.
While noting past restructuring efforts are helping, Lexmark also unveiled a new round of belt-tightening, focused on the manufacturing and supply chain as well as marketing and sales support. Some 825 jobs will be cut by early 2011, resulting in some $120 million of pretax charges and $110 million of annual savings starting in 2011.
The company also projected fourth-quarter earnings above analysts' expectations - 50 cents to 60 cents a share compared the average estimate of 47 cents according to a Thomson Reuters poll.
Lexmark has cut jobs and trimmed costs to mitigate pullbacks in consumer and corporate spending. Still, the company operates in a highly competitive market, and is hurt by its relatively narrow product base and falling information-technology spending, according to Standard & Poor's Ratings Services.
To help diversify its offerings, Lexmark and other printer makers have turned to providing high-tech services to boost sales. Lexmark has added Internet connections to its machines to provide pipelines for delivering services, like photo-book printing, directly to customers.
The company reported third-quarter earnings of $10 million, or 13 cents a share, down from $36.6 million, or 42 cents a share, a year earlier. Excluding restructuring charges, profit rose to 65 cents from 63 cents.
Revenue decreased 15% to $958 million.
In July, the company predicted earnings, excluding items, of 40 cents to 50 cents on revenue down slightly from the second quarter's $904.6 million. The view was below analysts' then-expectations.
Gross margin improved to 32.7% from 32.5%.
Revenue in printing solutions and services slid 14%, while imaging solutions revenue declined 18%. From the second quarter, growth was 5% and 8%, respectively.
Shares closed Monday at $22.57 and were inactive premarket. The stock is down 16% this year.
-By John Kell and Kevin Kingsbury, Dow Jones Newswires; 212-416-2480; john.kell@dowjones.com