Lexmark Reduces Earnings Outlook

The computer printer maker Lexmark International cut its second-quarter earnings outlook deeply yesterday, citing disappointing revenue from inkjet printers and cartridges, and its shares fell as much as 12 percent.

Lexmark blamed weak sales of inkjet replacement cartridges, including a shift to lower-priced “moderate use” cartridges, and lower unit revenue from hardware, driven by aggressive pricing, promotions and higher-than-expected product costs.

The warning is another disappointment from Lexmark, which has reduced the number of lower-priced, unprofitable printers it sells. Printer makers typically sell printers at a loss in the hope of reaping profits from ink sales.

Lexmark, which counts Dell as one of its biggest customers, said it expected second-quarter earnings of 64 cents to 69 cents a share. The midpoint of that range is about 24 percent lower than that of its previous outlook of 82 cents to 92 cents.

Excluding benefits of a reorganization, Lexmark said it expected earnings of 62 cents to 67 cents a share for the quarter, far short of the average Wall Street forecast of 86 cents, according to Reuters Estimates.