Business

Lexmark's sales, profit drop for year; company expects 625 layoffs, mostly overseas

Despite a record quarter and year for sales of laser toner, Lexmark International announced declines in overall revenue and profit for its fourth quarter and all of 2011. The company also said it would eliminate hundreds of jobs, mostly overseas.

The results, released Tuesday morning, come as the Lexington-based company continues to feel the pains of switching its inkjet business to focus on businesses rather than consumers.

To that end, the company announced a restructuring program that will do away with 625 positions worldwide, primarily overseas.

The majority of those positions deal with manufacturing related to the company's so-called "legacy" products, which Lexmark is phasing out in favor of focusing on its "core" products that target businesses.

"As we have exited consumer inkjet, we are moving this technology upstream, and as we do that, we're shedding some of the less-performing areas of the business," chief executive officer Paul Rooke said.

Though the majority of those areas are overseas, there is expected to be some impact in the United States. The company declined to say how many Lexington employees would be affected as it looks to better align its sales and marketing resources to focus on business customers.

The company intends to continue employing about 3,000 people in Lexington, so any layoffs are expected to be offset by new hires in growing areas.

The company's legacy hardware and supplies, which dragged down financial results, were 10 percent of revenue in the fourth quarter. That's down from 16 percent of revenue in the fourth quarter of 2010.

For the quarter, overall sales fell 4 percent, and they were down 0.6 percent for the full year. Net income fell 20.9 percent for the quarter and 5.6 percent for the year.

Despite the declining numbers, the year produced some highlights, including record laser-toner sales, which were up 9 percent from the previous high mark, set in 2010, according to the company.

Lexmark also saw positives in its managed print services offering, in which it manages printing for companies. Rooke said the company had a 100 percent contract renewal rate among its global Fortune 500 clients in 2011. It also has won 23 new contracts from Fortune 500-class clients globally during the past two years.

"Customers will only stay with you if they're satisfied," he said. "These customers had a choice, and they stayed with Lexmark.

"I think that's a very powerful testament."

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