Lexmark, which has been boosting research and development spending on more advanced models aimed at businesses, also set a new 2009 restructuring plan that will result in charges of $45 million and affect 375 jobs.

About one third of the jobs may be transferred to low cost regions, Lexmark chief executive Paul Curlander said on a conference call with analysts.

The company expects its fourth quarter revenue to decline about 17 percent. It had previously forecast a fourth quarter drop in the low to mid-teens range.

It said revenue had been hurt by lower laser and inkjet hardware unit sales and currency rate shifts during the quarter.

The company has been purposely shrinking sales of its lower-end printers, focusing instead on sales to customers like small businesses that use more replacement supplies, in an effort to better compete with Hewlett-Packard Co and Canon Inc <7751.T>.

However, the recession has already hurt computer related purchases, and weakening economies are expected to push spending on technology products and services down this year after seven years of growth, according to Forrester Research.

Analyst Shannon Cross of Cross Research said that Lexmark's woes are likely to benefit its rivals.

"While a negative datapoint on the industry, we think weakness at Lexmark is a long term positive for HP, Xerox , Epson <6724.T> and Canon as we believe stronger players will take share of Lexmark's $4 billion revenue stream," she said in a client note.

Lexmark expects fourth quarter earnings to be 71 cents to 76 cents a share excluding restructuring charges. It previously expected 70 cents to 80 cents a share.

It anticipates the new restructuring plan to save the company $50 million when completed, with about $40 million in savings in 2009.

The company also said the recession would affect its first quarter results.

"As we go into this quarter we are expecting continued weakness in laser and inkjet demand," Curlander said. "We did see week end user demand in supplies (in the fourth quarter) and we are expecting some of that in the first quarter."

It expects a revenue decline in the mid to high teens percentage range, and earnings per share of 65 cents to 75 cents excluding charges.

Analysts had expected a profit of 80 cents a share in period, according to Reuters Estimates.

Shares of Lexmark slipped by $3.14 to $25.21 in early trading on the New York Stock Exchange.

(Reporting by Franklin Paul; Editing by Derek Caney)