Lexmark's 3Q solid, 4Q is iffy

Lexmark International Group, Inc. (NYSE: LXK) posted third quarter results of $77 million, or 56 cents a share Monday, besting First Call's prediction by 2 cents a share. But the maker of printers and other computer peripherals also warned that revenue and earnings for the fourth-quarter would be at the low-end of analysts' expectations.

Shares closed at 93 Friday, down slightly from a 52-week high of 104 reached in late September.

Net earnings were an increase of 38 percent versus the 41 cents earned in the same period last year.

"Lexmark has grown earnings every quarter since going public in 1995," said Paul J. Curlander, chairman and CEO of Lexmark in a company statement.

Lexmark's third-quarter revenue was $845 million, an increase of 14 percent over 1998 revenues of $744 million. Without the negative impact of foreign currency translation, revenue growth would have been 15 percent versus last year, the company added.

The company reported that printer hardware and associated consumable supplies revenue increased 17 percent from the same period a year ago, and gross profit margins in 1999 were 35.9 percent, down slightly from 36.0 percent last year.

Curlander warned that revenue and earnings for the fourth-quarter would suffer due to "a major product transition in the corporate market, production contraints constraints in the consumer market, and adverse currency movements," which will also be complicated by "Y2K uncertainties." Curlander added that earnings results will be in the lower half of the 66 to 80 cents a share for the upcoming fourth quarter. He added that he sees Lexmark achieving its long term earnings per share growth goal of 20 percent in 2000, when the company's product transition and capacity issues are behind it.

Lexmark repurchased 410,000 shares of its common stock in the quarter for $25 million, resulting in remaining share repurchase authorization of $248 million at the end of the quarter.