Lexmark slashes profit outlook on weak sales

NEW YORK (Reuters) - Computer printer maker Lexmark International Inc. (LXK.N) slashed its second-quarter earnings outlook, citing disappointing revenue from both hardware and inkjet supplies, driving its shares down 11 percent.

The company, whose rivals include Hewlett-Packard (HPQ.N) and Eastman Kodak (EK.N), expects its second-quarter revenue to decline about 2 percent from a year ago, and sees earnings of 64 cents to 69 cents a share. That's roughly 24 percent lower than its earlier forecast of 82 cents to 92 cents.

Excluding restructuring benefits, it sees earnings of 62 cents to 67 cents a share for the quarter.

Both forecasts include an expected tax benefit of about 5 cents a share, Lexmark said in a statement.

According to Reuters Estimates, analysts on an average were expecting Lexmark to report revenue of $1.21 billion and earnings per share of 86 cents for second quarter.

Lexmark pegged the shortfall to weak inkjet supplies revenue, lower hardware average unit revenue driven by aggressive pricing and promotion and larger than expected product costs.

The company added that those same pressures would affect its third quarter results, and that it expects earnings per share to be around breakeven to 10 cents a share.

Analysts on average had expected a third quarter profit of 81 cents a share.

Shares of Lexmark fell before the opening bell on Monday, with the stock down to $43.99 in electronic composite trading.

Investors have soured on the stock since the company released disappointing quarterly results in April. Lexmark is in the midst of a plan to reduce sales of unprofitable inkjet printers, invest in building more competitive printers, and boost spending on "demand generation" activities such as advertising and promotion.

(Additional reporting by Dilipp S. Nag in Bangalore)