Lexmark Delivers Bad News on This Quarter, Next (LXK 3Q05 Conf Call Quotes)

Printer maker Lexmark International (ticker: LXK) reported third quarter earnings slightly above the lowered figures from its warning earlier this month. Investors were unimpressed, lopping another 6% off Lexmark's share price -- which is down over 50% this year. Key data and comments on recovery from the LXK conference call:

Income: $70.2 million or 59 cents/share (down from $156.1 million or $1.17/share for 3Q04)

Revenue: $1.22 billion (down 4%)

Guidance for 4Q05: income 40-50 cents/share; revenue for 4Q05 'to decline in high single to low double digit range'

Lexmark CEO Paul Curlander commented on what went wrong in the company's two main segments:

we believe that inkjet supplies growth was impacted more by weakness in end user demand than by changes in channel inventory… We believe that laser supplies growth was impacted more by changes in channel inventory than weakness in end user demand… During the first half of 2005 while holding our overall inkjet market share position year-to-year… we lost market share in branded inkjet as we were more reactive than proactive on market pricing and promotion. During the third quarter we decided to reduce our prices, improve our competitive position and more aggressively promote our products to try to improve our branded sales.

And how Lexmark will attempt to turn things around:

The real issue is end user demand and end user demand is all about installed base and possibly remanufactured penetration. So we're going to go focus on those things, and again, whether we determine that this change in growth rate is 1% or ex percent, our actions are going to be the same… We believe that it's possible for to us advance our technology to bring some innovation and feature function sets into the marketplace that can do things other than just price. We're very hopeful, for example, with our new C520 color laser.

(Quotes are from the CCBN StreetEvents transcript.)

Related:

• Lexmark CEO on Falling Demand and Price Cuts (LXK, DELL, HPQ, CAJ)
• Printer Market Share Data: Dell Taking Share (LXK, DELL, HPQ, CAJ)