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Lexmark rues earnings day

First-quarter income falls and the printer maker's share price does likewise, losing more than 17 percent in morning trading.

Lexmark International (LXK) shares plunged this morning after it announced that first-quarter revenues and income fell.

Shares in the printer maker fell as low as 19-1/8 in morning trading, down from its close of 23-5/8 on Friday.

Lexmark attributed its woes in part to price cuts and an extraordinary charge for some of its subordinated notes. It also said it expects to see lower revenues than Wall Street expected for the current quarter because of weak overseas currencies and lower printer prices.

And the company noted that it expects significantly increased operating expenses over year-ago figures due to increased marketing and sales efforts.

Lexmark's net income fell to $16.7 million, or 22 cents, for the quarter ending March 31, compared with net profits of $21.6 million, or 29 cents a share, a year ago.

The printer maker noted that excluding a $17 million extraordinary charge for prepaying subordinated notes, its net profits would have been $30.7 million, or 40 cents a share.

Wall Street had expected the company to report net earnings of 40 cents a share, according to First Call.

Revenues, meanwhile, fell to $583.4 million, down slightly from $587.8 million a year ago.

The company also attributed its revenue decline to the discontinuation of its keyboard business in the past year.

Foreign exchange rates also hurt revenues. Unfavorable European rates resulted in $20 million revenue drop over last year.

However, gross margins stood at 34 percent during the first quarter, an increase of 3 points over last year. The slight improvement came from better profit margins in its printers and related supplies. And the company noted that by prepaying notes it expects to improveme earnings by 2 cents a share in following quarters.

During the quarter, the company rolled out the 2055 Color Jetprinter for small business and a joint venture with Uniden America to offer inkjet printer solutions for Uniden appliances used for Internet telephone access.