Xerox Posts Higher-Than-Expected Profit
29 July 2016 - 10:30PM
Dow Jones News
Xerox Corp. said its profit rose more than expected in the
latest period, helped by falling expenses as the company plows
ahead with its planned separation.
The Norwalk, Conn., company has been working to separate the
business by the end of the year into two companies: the
slower-growing document business, which will keep the Xerox name,
and the services business, to be called Conduent Inc. On Friday,
Xerox said the separation is on track to wrap up this year.
Both units at the company have been struggling to grow. In the
June quarter, revenue in the company's services business declined
2%, or 1% on a constant-currency basis, to $2.47 billion. Sales in
its legacy hardware division dropped 7%, or 6% on
constant-currency, to $1.75 billion.
Xerox logged $28 million in separation costs compared with none
a year before but restructuring-related costs fell 55%, helping
push overall costs down 6% to $4.24 billion.
Late last month, the company agreed to let activist investor
Carl Icahn place a director on the board immediately, who would
continue on the board of the spun-off documents business. Mr.
Icahn—Xerox's largest shareholder, with a roughly 9.8% stake in the
company, according to FactSet—already has been promised three seats
at the business-services company when that is spun out.
Over all, Xerox earned $155 million, or 15 cents a share,
compared with $12 million, or a penny a share, a year before.
Excluding items, the company earned 30 cents a share, above its
guidance range for per-share profit between 24 and 26 cents.
Revenue fell 4% to $4.39 billion, in line with the analyst
estimate on Thomson Reuters.
The company backed its full-year adjusted earnings view of $1.10
to $1.20 a share; analysts expect $1.09 a share. In the current
quarter, Xerox expects adjusted per-share earnings between 26 and
28 cents a share. Analysts projected of 28 cents.
The company said it now expects to incur one-time separation
costs of $175 million to $200 million pretax, lower than its
previous estimate of $200 million to $250 million.
Xerox stock has risen 7.7% in the past month but is still down
6.8% so far this year. Shares were inactive premarket.
Write to Joshua Jamerson at joshua.jamerson@wsj.com
(END) Dow Jones Newswires
July 29, 2016 08:15 ET (12:15 GMT)
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