* Q1 adjusted EPS $1.14 vs. Street estimate of $1.25
* Q2 profit outlook short of of Wall St expectations
* Lowers Q2 revenue forecast
* Shares fall nearly 14 pct
(Adds investor comments, updates share price)
By Liana B. Baker
NEW YORK, April 26 Printer maker Lexmark
International Inc LXK.N issued a second-quarter forecast that
missed Wall Street expectations and its shares tumbled nearly
While the entire printer business is shrinking as offices
print fewer pages, Lexmark on Tuesday reported a decrease in
profit that outpaced industry declines, signaling it may be
losing out to rivals such as Canon (7739.T) and Samsung
Susquehanna Financial Group analyst Jeffrey Fidacaro said
Lexmark was particularly vulnerable in the low-end laser
"It's going to be challenging for them to show revenue
growth," he said.
The company said it expects revenue to decline by low
single digits in the second quarter, a reversal of its previous
guidance, which called for growth. Its profit forecast of $1.00
to $1.10 per share also fell short of the $1.15 per share that
analysts were expecting on average, according to
Henry Schacht, a portfolio manager with Schacht Value
Investors who owns Lexmark shares, said the results underscore
the fierce competition in the printer market but added that the
company's financials are still attractive in the long term.
"Their balance sheet is pristine and the stock is
undervalued considering the company is sitting on some $1.3
billion in cash and securities," Schacht said, adding that he
purchased more Lexmark shares on Tuesday.
Analysts called Lexmark's forecast disappointing and said
the company must clarify its growth strategy at its upcoming
analyst day in New York in May.
"Clearly their business model is under pressure. They
changed their revenue guidance and saw weakness across the
board," said Cross Research analyst Shannon Cross.
Lexmark's top executive brushed off concerns about the
company's future and pointed to the company's growth in areas
such as software and managed print services.
"While on the surface, the numbers were less than what we
expected, we saw good growth in strategic areas. It was just
that were masked by declines in low-end business and legacy
supplies," Lexmark Chief Executive Paul Rooke told Reuters in
Rooke said revenue has been hurt by higher costs for
transportation, shipping and distribution -- which he described
as short-term problems that the company is working to fix.
Lexmark said first-quarter net income fell to $1.04 per
share, from $1.20 per share a year earlier. On an adjusted
basis, the company earned $1.14 a share, which missed analysts'
expectations of $1.25.
Revenue decreased to $1.03 billion, compared with analysts'
estimates of $1.05 billion.
Lexmark shares were down 13.78 percent to $33.02 in
afternoon trading on the New York Stock Exchange.
(Editing by Gerald E. McCormick, Dave Zimmerman, Tim Dobbyn
and Steve Orlofsky)