Lexmark forecasts second-quarter profit largely below estimates
(Reuters) - Lexmark International Inc (LXK.N) forecast current-quarter adjusted profit largely below analysts' estimates as it grapples with lower demand for its printers and printing services.
The company forecast second-quarter adjusted earnings of 80 cents to 90 cents per share on revenue of $845.1 million to $863.4 million.
Analysts on average were expecting earnings of 89 cents per share on revenue of $846.3 million, according to Thomson Reuters I/B/E/S.
Printer makers are struggling with falling sales as printing has been a target of corporate cost cutting and personal computing has moved to tablets and smartphones.
Lexmark's first-quarter revenue beat expectations, while larger rival Xerox Corp's (XRX.N) first-quarter revenue came in below estimates on Tuesday.
Hardware companies such as Xerox, HP Co (HPQ.N), EMC Corp (EMC.N) and Dell Inc DELL.O were expected to come out with weak results after IBM Corp's (IBM.N) disappointing results last week, particularly in its hardware business.
Lexmark, which is shifting to higher value printing services and software products, announced its exit from the inkjet printer business last August.
"While the company continues to ramp up its software and services offering, there will be a large, profitable void to fill as they exit the inkjet segment of the printing market over the next few years," Credit Suisse analyst Kulbinder Garcha wrote in a pre-earnings note.
Lexmark's imaging division, which includes its laser printers, software and managed print services business, fell to 13 percent to $840 million. The division accounted for 96 percent of the company's revenue last year.
Net income fell to $34.8 million, or 54 cents per share, in the first quarter, from $61 million, or 84 cents per share, a year earlier.
Excluding items, earning were 88 cents per share.
Revenue fell to $884.3 million.
Analysts on average expected earnings of 87 cents per share on revenue of $873.6 million, according to Thomson Reuters I/B/E/S.
Shares of the Lexington, Kentucky-based company closed at $25.45 on the New York Stock Exchange on Monday.
(The story corrects paragraph 5 to say Lexmark's revenue beat, not misssed, expectations, removes reference to "weak demand".)
(Reporting by Supantha Mukherjee and Lehar Maan in Bangalore; Editing by Supriya Kurane)