Printer maker Lexmark beats estimates as software sales rise

Reuters

* Expects 2013 revenue decline of 5-6 pct vs 6-7 pctforecast earlier

* Third-quarter adjusted earnings $0.95/share vs est $0.91

* Company wins new orders for imaging software, services

* Shares rise as much as 11 pct

By Sruthi Ramakrishnan

Oct 22 (Reuters) - Printer maker Lexmark International Inc reported better-than-expected quarterly earnings afterwinning new orders for its imaging software and services,sending shares in the company up as much as 11 percent.

Lexmark, which stopped making inkjet printers last year tofocus on more lucrative software and services, also said itsfull-year revenue would fall by less than previously forecast.

Chief Executive Paul Rooke said on a post-earningsconference call that Lexmark had won 25 software deals this yearfrom customers in the banking, retail, manufacturing, governmentand healthcare sectors.

Revenue from the company's Perceptive business, which makessoftware to scan everything from spreadsheets to medical images,rose 32 percent in the third quarter.

Revenue from managed print services (MPS), which allowcompanies to outsource their printing needs to a serviceprovider, rose 18 percent in the quarter to Sept. 30.

"MPS and Perceptive software, where we've been projectingabout 15 percent growth combined ... are going to be a littlemore as we finish up the fourth quarter," Rooke told Reuters inan interview.

The two units combined account for slightly more than aquarter of the company's total revenue. Laser printers accountfor the majority of its sales.

Lexmark said it expected full-year revenue to decline by 5percent to 6 percent, the second time since July that it hasreined in the forecast due to big contract wins in software andservices. Previously, it had forecast a decline of 6-7 percent.

Rooke said the recent acquisitions of software firmsSaperion and PACSGEAR would contribute full-year revenue.

In the third quarter, the Lexington, Kentucky-based companyposted a net profit of $28.5 million compared with a break-evenquarter a year earlier.

However, Lexmark reduced its full-year adjusted earningsforecast to between $3.85 and $3.95 per share from $3.90 to$4.10 per share, citing a higher-than-expected tax rate - theresult of a higher proportion of U.S. sales in the total.

"Our international earnings are taxed at a lower rate thanour U.S. domestic earnings," said Rooke. "So when you have ashift in that mix - a little less international earnings, andmore U.S. - that effective tax rate goes up."

Printer sales in the United States - particularly large workgroup units, which include laser printers that can print, copy,fax and scan to a network - have also been hit by a slowdown infederal government purchases.

"It wasn't the shutdown," said Rooke. "It is more thesequester that is impacting."

Excluding items, the company earned 95 cents per share inthe third quarter. Revenue dropped 3 percent to $890.5 million.

Analysts on average had expected earnings of 91 cents pershare on revenue of $872.2 million.

Lexmark's shares were up 6.4 percent at $38.09 in afternoontrading on the New York Stock Exchange on Tuesday.

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