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Lexmark beats third-quarter estimates

The company surges past analysts' expectations for third-quarter profit as it rides stronger sales of both printers and printing supplies.

Lexmark handily beat analysts' estimates for its third-quarter profit as it rode stronger sales of both printers and printing supplies.

The Lexington, Ky., printer manufacturer on Monday reported net earnings of $104 million and a profit of 79 cents per share on record revenue of $1.16 billion for the third quarter.

Analysts had expected Lexmark to post a per-share profit of 69 cents and revenue of $1.10 billion, according to First Call.

During the same period a year ago, Lexmark turned in net earnings of $90 million and a per-share profit of 70 cents, including a 9 cent charge, on revenue of $1.04 billion.

"Our third-quarter results reflect strong sales of both inkjet and laser printers which with their associated supplies drove overall revenue to record levels," Lexmark CEO Paul Curlander said in a statement.

It was the associated supplies that accounted for the greater share of the quarter's revenue, at $641 million, compared with $430 million for the printers themselves, and both segments rose 13 percent year over year, the company said. Inkjet sales played a major role in the increase, Lexmark executives said during a conference call to discuss the earnings report, even though high demand meant that some models were in short supply.

"The market probably is a little stronger than it was a few months ago," Lexmark CFO Gary Morin told CNET However, Morin said it was more of a steady pickup than a sharp bounce. "It slowly is improving."

The important thing for Lexmark, Morin said, is that it was able to significantly grow its hardware sales, since each printer sold now means more supplies sales down the road.

"We did not have strong growth in the first couple of quarters," Morin said. "Now it's the reverse."

Morin said that Dell, which began selling Lexmark-built printers last March, does not yet account for 10 percent of company sales, though in theory it could reach that point if it expands the range of printers it sells.

"It depends how long that we stay together," Morin said, noting that the relationship is not exclusive. At the same time, Morin said the partnership benefits both companies. "We enjoy the relationship," he said.

Lexmark voiced some caution for the current quarter because of price competition and the uncertain economy.

"The printing market is very competitive," Morin said. "It has been competitive and it continues to (get) even more competitive."

The company nonetheless predicted that its revenue would grow at a year-over-year rate of "mid- to high single digits" and that its per-share profit would be between 85 cents and 95 cents.

The company, which trimmed expenses in the third quarter, said that the fourth quarter would see an effort to expand its presence in the top echelons of the business printer market.

On Monday, Lexmark launched three high-end business-oriented printers, including a new color laser machine and a pair of multifunction devices, which can fax, scan, copy and print documents. Multifunction, or all-in-one, printers are particularly popular with consumers purchasing at retail.

Lexmark's new C752 printer can turn out 20 pages per minute in black-and-white and in color. It costs $1,999, the company said.

The company also unveiled a color multifunction device, the Lexmark X752e, for printing documents, making copies, scanning and faxing. The heavy-duty machine, which can print up to 20 color pages per minute, will sell for $7,699, the company said.

Lexmark's X912e color multifunction device can print, copy and scan larger (11-by-17-inch) documents. The device, which can print or copy as many as 28 pages per minute, is priced at $11,499, the company said.

Lexmark also introduced the 5500 MFP Option, a kit that can convert the X912e's predecessors, the C912 or C910, to multifunction devices for $4,999.

The three printers and the conversion kit are available now, the company said.