While its forecast of a 2% revenue decline is in line with its prediction in April that the fall would be in the low- to mid-single-digit percentage range, it said it now expects earnings per share before exceptional charges to be in the range of $0.64 to $0.69, well down on its guidance of $0.82 to $0.92.
Inkjets for the consumer market are at the heart of Lexmark’s problem because despite a dwindling user base, it needs to drive up printer sales to keep orders for cartridges flowing. But printers are unprofitable and the situation was made worse by lower unit revenue driven by aggressive pricing and promotion. It also faced higher than expected product costs.
CEO Paul Curlander said that to improve inkjet supplies sales, the company needs to drive more sales of inkjet units. We are in a difficult situation, he said. The supplies side was also hurt by a shift to cheaper moderate use cartridges, he said.
While OEM sales continued to slide, Lexmark reported a 30% increase in its branded products but the growth was at the low end of the market from which it is anxious to escape.
It expects third-quarter earnings per share to be between $0.00 and $0.10, compared with $0.85 a year earlier.
