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Lexmark International announced that financial results for its third quarter of 2005 will be lower than expected.
Although based on partial data for the quarter, the company now expects its third quarter revenue to decline 4 to 5 percent year over year. It expects its earnings to be $0.40 to $0.50 per share, excluding the estimated third quarter impact of the previously announced workforce reduction. This compares to the guidance it provided for the third quarter on July 26, 2005, of low-single digit revenue growth and earnings per share of $0.95 to $1.05. The cost of the workforce reduction in the third quarter is expected to be approximately $0.05 per share.
As compared to the company’s guidance for the third quarter, lower laser and inkjet supplies revenue was the main driver of the overall revenue shortfall. The lower than anticipated laser and inkjet supplies revenue was due to a reduction in channel inventories, and to lower end user demand. Laser and inkjet printer revenue was less than expected due to more aggressive product pricing and promotion and slower demand. Earnings per share results are being negatively impacted by the revenue shortfall.
Looking ahead, the company expects these same factors to impact the fourth quarter. In the fourth quarter of 2005, although the analysis is not yet complete, the company currently expects revenue and earnings per share to be significantly below the current average of analysts’ expectations. The company will provide updated guidance for the fourth quarter when it releases its third quarter earnings on October 25.
Conference Call
The company will be hosting a conference call with securities analysts today at 8:30 a.m. Eastern Time. A live broadcast and a complete replay of this call can be accessed from Lexmark’s investor relations Web site at http://investor.lexmark.com. If you are unable to connect to the Internet, you can access the call via telephone at 888-338-6461 or the replay shortly after the call by calling 877-519-4471 using access code 6569075. This telephone replay will be available until noon on Monday, October 10, 2005.
Upon completion of this conference call, the company will have no further comment on its third-quarter results or fourth-quarter guidance until its earnings announcement on Tuesday, October 25, 2005.
