Lexmark CEO on Falling Demand and Price Cuts (LXK, DELL, HPQ, CAJ)

Printer maker Lexmark (ticker: LXK) cut its third-quarter profit estimate fully in half last week, prompting a 30% nosedive in its shares. Lexmark CEO Paul Curlander blamed a sharp fall in demand and aggressive competitor pricing for the weak quarter. From the Thompson SteetEvents transcript of Lexmark's conference call:

The shortfall was mostly driven by lower than anticipated laser and inkjet supplies revenue. This shortfall versus our expectation was due to movement in channel inventory levels and softer than expected end-user demand... The shortfall in the third quarter was also affected by laser and inkjet printer revenue that was less than we expected due to more aggressive product pricing and promotion...

Curlander's strategy to turn things around focuses on improving sales of Lexmark's own-branded products (as opposed to its OEM supply business):

...the first thing we've got to do to get that moving is start to move the branded unit sales, which is another reason why we're adjusting the price position on the products and driving more aggressively on the promotions.

(Quotes are from the CCBN StreetEvents transcript.)

But similar price cuts didn't spur sales for Lexmark last quarter. Arik Hesseldahl of BusinessWeek says Dell's foray into the printer market is what's really ailing Lexmark.