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Lexmark Misses

It guides lower too.
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Lexmark (LXK) missed Wall Street's first-quarter earnings targets, citing declines in inkjet cartridge sales and aggressive printer pricing.

The Lexington, Ky., printer company also guided lower for the second quarter, saying it expects sales and earnings to fall from year-ago levels.

For the first quarter ended March 31, Lexmark made $92 million, or 95 cents a share, up from the year-ago $86 million, or 78 cents a share. Revenue slipped to $1.26 billion from $1.28 billion a year earlier.

Excluding certain costs, earnings were 96 cents a share. Analysts surveyed by Thomson Financial were looking for a profit of $1.03 a share on sales of $1.26 billion.

"While our results were in line with the guidance ranges we provided on our January call, we view this as a mixed quarter for Lexmark," said CEO Paul Curlander. "Challenges included OEM unit sales that continued to be weak, declines in inkjet supplies sales, and hardware pricing that was fairly aggressive in both laser and inkjet markets."

Curlander said Lexmark "continued to step up our investments in brand development and R&D. Given the strength of our product line, we are now increasing our investment in demand generation in all customer segments. While these investments negatively impact results in the current quarter, we believe we will see the benefit from these investments in the future."

The company guided to second-quarter earnings of 82 to 92 cents a share, down from operating profit of $1.09 a year ago. It expects sales to fall in the low- to mid-single-digits percentagewise, while analysts were looking for sales to tick up 0.8%.