Ikon's Income Is Jammed

Printer concern IkonIKN took a 21.5% free fall Thursday after cranking out a significantly weaker earnings view for the fiscal first quarter.

Thanks to an unforeseen year-on-year sales decline and a burdensome tax rate, the Malvern, Pa., company now expects quarterly income to drop from last year's 21 cents a share to between 15 cents and 17 cents. That's at least 7 cents under the average analyst estimate from Thomson Financial.

In October, Ikon had projected a rise from a year earlier -- 22 cents to 24 cents a share -- at which point it called growth its "main focus" in fiscal 2008.

But those plans appear hampered from the start this fiscal year, as revenue will likely slip 1% in the first quarter.

CEO Matthew Espe says the company is "immediately" addressing that issue, though he added that "we continue to believe that our focus on color is the right strategy for Ikon, and see no fundamental reason why we can't grow revenue in fiscal 2008." Should its top line continue to sag in the following quarter, Espe said, "We will take further actions."

As for the onerous taxes, Ikon said that, primarily due to a Canadian tax-law change, the rate came to 44%. For the full year, the tax rate should pan out at 33%, said the company.

Shares were recently sliding $2.11, or 17.3%, to $10.08.