Lexmark will axe 825 jobs worldwide as part of a cost-cutting exercise. It will incur a $120m restructuring charge...
that will cause third quarter profits to drop steeply.
The Kentucky-based printer manufacturer made $10m in the three-month period, down nearly 73% year-on-year, as sales fell 15% to $958m. Yet sales rose 6% quarter on quarter.
"Stronger than expected customer demand drove good sequential growth for Lexmark, exceeding our expectations in the third quarter," said CEO Paul Curlander.
Despite this upswing and $180m of expense reductions already achieved this year, he said Lexmark was embarking upon "additional expense and cost actions".
The company said the October plan will include a reduction "primarily in the areas of manufacturing and supply chain, service delivery overhead, marketing and sales support, corporate overhead and development".
The actions, due to be completed by the end of the first quarter 2011, are expected to impact 825 positions worldwide, resulting in a total pre-tax charge of $120m, generating savings of $70m in 2010 and $110m from 2011.
Sales of business products in the Printing Solutions and Services Division (PS&SD) dropped 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 and the third quarter represented the first quarter-on-quarter rise in supplies in six years and the strongest quarter-on-quarter percentage hike in hardware sales for 11 years.
Lexmark expects fourth quarter revenues to be up slightly on the third quarter.
A version of this story appeared on MicroScope.