Lexmark, a manufacturer of Mac compatible printers, reported a 5.9 per cent increase in earnings during its third quarter, but still plans to cut 12 per cent of its work force in its current fourth quarter.
1,600 jobs will go, as the company struggles to cope with reduced market demand. Lexmark posted a net income of $70 million in the third quarter, compared with $66.1 million in the same period last year. Revenues climbed to $1.0 billion from $926.6 million.
Paul Curlander, Lexmark's chairman and CEO, said: "Lexmark is pleased with the results during a year that has been particularly challenging for many technology companies."
Justifying the lay-offs, Curlander said: "These difficult steps are necessary to intensify our focus on being the low-cost producer in the industry. They will also help us make the required investment in research and development." The lay-offs will cost the company a one-off $100 million to $120 million, for annual savings of $50-$60 million.
The plan is to trim the company down to perform better when the market strengthens once again. In the near term, the company sees the market weakening further, and anticipates a decline in fourth-quarter margins.