Lexmark will axe 825 jobs worldwide as part of a cost cutting exercise and has decided to take a proportion of the resulting restructuring charge on the nose in the third quarter, causing profits to drop steeply.
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The printer firm made $10m for the three months ended 25 September, down nearly 73% year-on-year while revenues dropped 15% on 2008 to $958m but went up 6% sequentially. It incurred a $33m pre-tax charge related to actions being taken.
"Stronger than expected customer demand drove good sequential growth for Lexmark, exceeding our expectations in the third quarter," said CEO Paul Curlander.
Despite the quarter-on-quarter upswing and $180m worth of expense reductions already achieved this year, Lexmark is embarking upon "additional expense and cost actions."
The company said the October plan will include "reduction primarily in the areas of manufacturing and supply chain, service delivery overhead, marketing and sales support, corporate overhead and development."
The actions are expected to be complete by the end of Q1 2011 and "are expected to impact 825 positions worldwide" resulting in a total pre-tax charge of $120m but generating savings of $70m in 2010 and $110m from 2011.
In Q3 sales of business products in the Printing Solutions and Services Division (PS&SD) went down 14% year-on-year to $654m while the Imaging Solutions Division reported an 18% drop in revenues to $304m.
The outlook for the company appears to be slowly improving as Q3 represented the first sequential rise in supplies in six years and the strongest quarter on quarter percentage hike in hardware sales for 11 years.
For the fourth quarter, Lexmark expects revenues to be up slightly sequentially.