Xerox Corp. (XRX) eked out a profit amid a hefty charge from its
plan to cut 5% of the work force resulting from falling demand.
Shares were down 12% at $6.70 in recent premarket trading as the
copy-machine and printer giant also projected first-quarter
earnings of 16 cents a share to 20 cents a share. Analysts surveyed
by Thomson Reuters projected 24 cents.
Meanwhile, Xerox reported net income of $1 million, down from
$382 million, or 41 cents a share, a year earlier. Excluding the
restructuring charge and an equipment write-off, earnings were 30
cents a share. In October, Xerox projected 34 to 36 cents, below
analysts' then-expectations.
Revenue fell 11% to $4.37 billion, with nearly half the drop due
to the stronger dollar. Analysts had most recently expected $4.71
billion.
Gross margin fell to 37.9% from 40.5% on increased costs.
Like most other businesses, Xerox is battling falling sales
brought on by the recession. In the quarter, post-sale revenue -
service, supplies and rentals - fell 8%. Equipment sales slid
15%.
Its stock is down 43% for the past year, mired at levels not
seen since early this decade. But in November it ruled out a
dividend cut and tapping capital markets "in the foreseeable
future," crediting its "strong" financial position. Xexox added
that business from repeat customers and cost cuts would help it
weather the recession. The workforce reductions are aimed at saving
$200 million this year in addition to boosting profit growth.
-By Mike Barris, Dow Jones Newswires; 201-938-5658;
mike.barris@dowjones.com
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