Lexmark Shares Plummet Following 3Q Warning

Lexmark's stock dropped more than $14 per share, or 19 percent, to close Monday at $59.40 per share. The drop came after Lexmark, Lexington, Ky., predicted third-quarter earnings of 63 cents to 73 cents per share. Thomson First Call estimated 80 cents per share.

For its second quarter ended June 30, Lexmark reported revenue of $1.12 billion, a 6 percent increase from the $1.05 billion reported for the same period last year.

Net income for the quarter increased to $101.7 million, or 77 cents per diluted share, from $89.1 million, or 67 cents per diluted share, in 2002. Thomson First Call predicted earnings of 78 cents per share.

Revenue from laser and inkjet supplies rose 11 percent, to $630 million from $566 million, and now accounts for 56 percent of total revenue--a 2 percent increase over last year. Printer sales increased to $400 million from $394 million.

"As we look forward to the third quarter, we believe our extensive corporate and consumer product launches in the second quarter have put us in a good position for the second half of 2003," said Paul Curlander, Lexmark CEO. "We continue to be cautious, however, due to softness in corporate and consumer spending and aggressive pricing competition. In the third quarter of 2003, we expect a year-over-year revenue growth rate in the low- to mid-single digits and earnings per share of 63 to 73 cents, compared to 70 cents in the third quarter of 2002."