Lexmark dives on warning, downgrades

Lexmark International (NYSE: LXK) tumbled $13.63, or 26 percent, to $38.38 Tuesday after analysts downgraded the stock in the wake of its third- and fourth-quarter profit warnings.

Company officials warned Monday that its third- and fourth-quarter earnings will fall short of analysts' estimates due to slow sales of inkjet cartridges and a weak euro.

Company officials said it expects to earn between 45 cents to 50 cents a share in its third quarter, well below the First Call Corp. consensus estimate of 60 cents a share.

It also said fourth-quarter earnings will check in between 55 cents to 65 cents a share, below the consensus estimate of 73 cents a share.

On Tuesday, PaineWebber cut the stock from a "buy" rating to "neutral" while Bear Stearns slashed it from an "attractive" rating to "neutral."

The computer printer manufacturer said sales of inkjet cartridges in the quarter may be at least $25 million less than in the company's prior expectations.

It still expects to post a 9 percent jump in sales from the year-ago quarter.

Sales in the fourth quarter, which will also suffer from slower-than-expected growth in the corporate market, is expected to be 10 percent to 15 percent higher than the fourth quarter of last year.

In its latest quarter, Lexmark missed analysts' estimates when it posted a profit of $84 million, or 62 cents a share, on sales of $893 million.

Its shares have taken a beating in the past four months, falling to a 52-week low of $43.13 in August.

Seven of the eight analysts following the stock rate it either a "buy" or "strong buy."