Lexmark Misses, Guides Down

The printer and supplies maker says demand was soft.
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missed first-quarter earnings targets Tuesday, citing soft consumer demand and aggressive pricing in its core computer printer business.

For its first quarter ended March 31, the Lexington, Ky., company earned $124 million, or 96 cents a share, a shade above the year-ago $121 million, or 91 cents a share. Revenue rose to $1.36 billion from $1.26 billion a year ago.

Latest-quarter earnings were 99 cents a share excluding certain costs, 4 cents shy of the Thomson First Call analyst consensus estimate.

"Our revenue growth in the quarter was driven mainly by supplies, reflecting the consistency of our business model, and also by strong demand for our laser printers," said CEO Paul Curlander. "We continued our increased investments in R&D and branding in the first quarter in support of our strategic initiatives to drive long-term growth."

Lexmark also guided toward a weaker-than-expected second quarter, saying earnings would hit $1.01 to $1.11 a share. The First Call estimate is $1.11.

"The company believes that the appeal and ease of use of its product line and the strength of its supplies-driven business model will contribute to future growth," Lexmark said. "However, the potential for weakening market demand and for aggressive price competition continue."

Lexmark closed Monday at $78.75.