Lexmark Shares Down 13% in Pre-Market on Q2, Q3 Earnings Warning

Shares of Lexmark were last down 13% to $43.00 in pre-market trading, on news the company warned Q2 revenue is expected to decline 2% y/y and adjusted EPS is now projected between $0.62 - $0.67, compared to prior guidance of $0.82 - $0.92. Analysts were expecting $0.86/share on average. Lexmark blamed the downward revision on "a shortfall in operating income in the consumer segment market ... due to less than expected inkjet supplies revenue, lower hardware average unit revenue driven by aggressive pricing and promotion, some greater than expected product costs, and greater than expected branded inkjet unit growth." It expects more of the same in Q3, compelling it to forecast EPS of breakeven to $0.10, compared to the $0.81/share analysts had estimated. Lexmark is holding a conference call Monday at 8:30 A.M. New York time. It is scheduled to report Q2 earnings July 24. Lexmark gained 0.8% to $49.40 on Friday.

Sources: Press release, MarketWatch
Commentary: Lexmark: LBO at $60-$70 A Share Looks Doable • Are Printer Companies Chasing the Wrong Target? • Lexmark Trips Up On Earnings, Continues To Be Unpredictable
Stocks/ETFs to watch: Lexmark International Inc. (LXK). Competitors: Hewlett-Packard Co. (HPQ), Canon Inc. (CAJ), Eastman Kodak Co. (EK)
Conference call transcripts: Lexmark International Q1 2007, Hewlett-Packard F2Q07, Eastman Kodak Q1 2007

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