("Xerox 3Q Profit Falls 52% On Lower Revenue; Fiscal-Year View
Up," published at 7:12 a.m. EDT, incorrectly stated the
third-quarter profit figure. A corrected version follows.)
Xerox Corp.'s (XRX) third-quarter profit fell 52% as the
office-equipment company posted lower revenue and said it hadn't
seen a meaningful shift toward increased spending on
technology.
"For many of our business clients - small to large - there
remains a hesitancy to invest until more economic factors show
signs of steady improvement," said Chief Executive Ursula Burns.
"We expect this trend will continue to put pressure on revenue for
the balance of the year."
The company also projected fourth-quarter earnings of 20 cents
to 22 cents a share, in line with analysts' view of 21 cents,
according to Thomson Reuters. But despite the warning of revenue
pressure, Xerox also raised its full-year target to 55 cents to 57
cents from its July view of 50 cents to 55 cents.
The recession has exacerbated weak demand for printers, and
results have been muted by a stronger dollar as much of its revenue
comes from overseas. In a bid to seek new markets as its
traditional lines of business lose steam, Xerox recently agreed to
buy business-software provider Affiliated Computer Services Inc.
(ACS) in a deal recently valued at about $5.6 billion.
The printer and copier maker posted earnings of $123 million, or
14 cents a share, down from $258 million, or 29 cents a share, a
year earlier. In July, the company projected 10 cents to 12 cents,
below analysts' estimates at the time.
Revenue dropped 16% to $3.68 billion, with 2% of the drop due to
the strong dollar. The revenue decline was attributed to world-wide
economic weakness. Analysts expected $3.63 billion.
Gross margin improved to 39.8% from 39.2% amid restructuring and
other cost actions.
Postsale revenue - service, supplies and rentals - dropped 11%,
with 2% attributed to the stronger dollar. Equipment sales were
down 29%.
The company said it cut debt by $938 million so far this year
and is on track to reduce total debt by $1 billion this year.
Shares were inactive in premarket trading at $7.72. The stock
has nearly doubled since March, but is under the 52-week high of
$9.75 last month.
-By John Kell, Dow Jones Newswires; 212-416-2480;
john.kell@dowjones.com