Lexmark Adds Another 3%
Shares of Lexmark (NYSE: LXK) have had a big week after the company announced new strategic initiatives designed to cut costs and boost the stock price on Tuesday. During Thursday's trading session, LXK has added a little less than three percent despite a down market. Over the last five days, the stock is up better than 11 percent.
Earlier this week, the company announced that it would be exiting the inkjet printer business and cut 1,700 jobs worldwide.
The company's plan will save it $95 million annually once it is completed. Lexmark will continue to service and support its installed base of inkjet printers despite the fact that the company is exiting the printer manufacturing business.
The 1,700 job cut represents nearly 13 percent of the company's workforce. Roughly 1,100 of the jobs will be trimmed from Lexmark's manufacturing business. The company also said that it is talking with financial advisers about a sale of its inkjet technology.
Pre-tax costs related to the restructuring initiatives are expected to be $160 million with $110 million coming in 2012 and the rest in the subsequent three years. Lexmark also boosted its stock repurchase plan by $100 million to $251 million.
In the wake of the restructuring announcement, Lexmark may be of interest to swing traders. From a technical perspective, the stock is starting to look much better, although there is still work to do.
Lexmark has now re-taken its 20-day and 50-day moving averages, but it is still trading more than 25 percent below its 200-day moving average. Shares, however, are definitely starting to show relative strength as the RSI reading has moved above 57.
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