Lexmark International Inc. Earnings: Two Straight Quarters of Falling Profit

S&P 500 (NYSE:SPY) component Lexmark International Inc. (NYSE:LXK) reported its results for the fourth quarter. Lexmark International develops and manufactures printing and imaging products and solutions for offices and homes.

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Lexmark International Earnings Cheat Sheet for the Fourth Quarter

Results: Net income for Lexmark International Inc. fell to $69.3 million (94 cents per share) vs. $87.6 million ($1.10 per share) a year earlier. This is a decline of 20.9% from the year earlier quarter.

Revenue: Fell 4% to $1.06 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: LXK reported adjusted net income of $1.25 per share. By that measure, the company beat the mean estimate of $1.15 per share. Analysts were expecting revenue of $1.06 billion.

Quoting Management: “2011 was a good year for Lexmark given the challenging global economic environment,” said Paul Rooke, Lexmark chairman and chief executive officer. “Lexmark delivered record laser supplies revenue, record gross profit margin and a strong operating income margin. “We continued solid execution of our strategic initiatives in 2011, focusing our significant imaging talent and resources squarely on business customers and aggressively growing our software business,” added Rooke. “We remain confident in our ongoing ability to generate positive free cash flow as we have for each of the past 10 years, and going forward we plan to return more than 50 percent of free cash flow to our shareholders through dividends and share repurchases.”

Key Stats:

The company has now seen net income fall in each of the last two quarters. In the third quarter, net income fell 6.9% from the year earlier quarter.

A year-over-year revenue decrease last quarter snaps a streak of two consecutive quarters of revenue increases. Revenue rose 1.5% in the third quarter and 1.1% in the second quarter.

The company topped expectations last quarter after falling short of forecasts in the third quarter with net income of 95 cents versus a mean estimate of net income of $1.02 per share.

The company’s cost of sales fell 6.6% from a year earlier to $663.5 million. Last quarter, cost of sales was 62.6% or revenue versus 64.4% a year earlier.

Looking Forward: Analysts have a positive outlook for the company’s performance next quarter. Over the past seven days, the average estimate for the first quarter of the next fiscal year has gone up to $1.12 a share from $1.10. For the fiscal year, the average estimate has moved down from $4.62 a share to $4.61 over the last thirty days.

Competitors to Watch: Canon Inc. (NYSE:CAJ), Hewlett-Packard Company (NYSE:HPQ), Xerox Corporation (NYSE:XRX), Dell Inc. (NASDAQ:DELL), Synaptics, Incorporated (NASDAQ:SYNA), Immersion Corporation (NASDAQ:IMMR), Hauppauge Digital, Inc. (NASDAQ:HAUP), EMC Corporation (NYSE:EMC) and Logitech Intl. SA (NASDAQ:LOGI).

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com