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Tuesday, Oct. 20, 2009

LIVE BLOG: Lexmark conference call on earnings

Lexmark International executives will discuss the company's second-quarter earnings during an 8:30 a.m. conference call with analysts. Herald-Leader business writer Scott Sloan will blog live during the call. For a complete report on the company's earnings, click here.

9:25 a.m.

An analyst asked about the focus of the restructuring and also operating expense levels. CEO Paul Curlander said that while the company hopes to protect its sales coverage and product development but intends to look at ways to save on supply chain and overhead elsewhere. CFO John Gamble Jr. declined to elaborate specifically on the operating expenditures but said the company does intend to take operating expenses down as part of the restructuring. "It's an ongoing exercise," he said.

9:17 a.m.

Bill Fearnley of FTN Midwest asked about Lexmark's expansion in office superstores and whether it wants to get back in Best Buy this year or next. CEO Paul Curlander said Lexmark sales have benefited in the store from better products and the enhanced shelfspace. In terms of what could have gone better, Curlander said "clearly we would look to be ... in Best Buy ... and at some point in time we would like to be back on their retail shelves." He noted, though, that the chain continues to sell Lexmark ink and does sell hardware on BestBuy.com.

9:15 a.m.

Sanford Bernstein analyst Toni Sacconaghi asked if there is opportunity going forward to further reduce research and development spending. CEO Paul Curlander said the company has ramped up research and development on the laser printer side over the last four or five years and has "just about" gotten to the point where it has broadened its product line to the point it desired. He said the company will look to improve the productivity and efficiency in R&D but doesn't want to back out of any of the segments it has expanded to in recent years.

9:09 a.m.

A Goldman Sachs analyst asked about what triggered another round of restructuring in the quarter. CEO Paul Curlander said "we feel very encouraged by the pickup in demand in the third quarter ... that said, overall our revenue was still down 15 percent year to year." He added, "We see lots of competitive pressure in pricing ... and we continue to see our competition taking aggressive cost and expense action."

9:06 a.m.

Shannon Cross of Cross Research asks about end user demand for ink and toner. CEO Paul Curlander said "supplies in the quarter was a good news story. We saw improvement in end user demand ... it was greater than our expectation. Clearly we feel pretty good that these were all good signs in terms of customer demand." He noted that the company saw improvements in both ink and laser toner sales as there were smaller declines.

9:04 a.m.

Bill Shope of Credit Suisse asks about the company's supply chain inventory dynamics in the quarter and also hardware profitability. CEO Paul Curlander said there was not much impact of the changeover in the company's inkjet sales to more from office superstores. Curlander noted that it is more expensive to move items at office superstores as opposed to mass market retailers, but that the company focuses on pages printed, which tend to be higher on printers sold at office superstores.

8:41 a.m.

Chief Financial Officer John Gamble Jr. begins an overview of financial results for industry analysts.

8:41 a.m.

CEO Paul Curlander wraps up his remarks, saying that "while it could be a long recovery for the overall printer market ... we believe we are making Lexmark into a stronger and leaner competitor..."

8:39 a.m.

CEO Paul Curlander said sales have been good on the company's newest inkjet models driven by the company's additional shelfspace at office superstores, including Office Depot, OfficeMax and Staples.

8:35 a.m.

CEO Paul Curlander said sale of ink and toner was down 12 percent year over year but better than performance in the second quarter.

8:34 a.m.

CEO Paul Curlander offers an overview of the quarter saying results for revenue and profit were both better than Lexmark expected.