Xerox Corp. (XRX) sees first-quarter earnings well below already-downbeat expectations in part on slumping spending by corporations around the world.

Shares fell 19% to $4.32 Friday. The stock is down more than 40% since the beginning of 2009 and has fallen more than 60% since early September.

The Norwalk, Conn. company makes printers for both offices and large-scale production, but garners most of its sales from its services businesses, which include maintenance contracts, printing supplies and lease revenues. Xerox takes in the majority of its revenues from overseas, and the spread of the downturn internationally as well as the strengthening dollar have likely hurt sales numbers abroad.

Xerox also plans to cut another $300 million in costs, though details on where the savings would come from weren't disclosed. The cost cuts come on top of plans to save $250 million this year, largely from last year's 5% cut in the work force.

Industry prospects aren't bright near-term, said Chairman and Chief Executive Anne Mulcahy, who noted Xerox expects "enterprise spending on technology will continue to decline this year."

The company now sees first-quarter earnings of 3 cents to 5 cents a share, down from a January view of 16 cents to 20 cents a share that was below analysts' then-expectations. Six cents of the shortfall is due to restructuring charges and earnings weakness at 25%-owned partner Fuji Xerox Corp. The rest is from the industrywide slump caused by "the increasingly more challenging global economic environment."

Xerox added that revenue in January and February was down 18%, with 5 percentage points of that due to the weaker dollar.

"We believe Xerox' results reflect an extremely weak end market for tech hardware, ...a continued contraction at the distributor level for supplies and some slowdown in page volume," said Shanon Cross of Cross Research in a note to clients. "We expect to see weakness across all printing and imaging companies."

Like most other businesses, Xerox is battling falling sales brought on by the recession. As a result, the company and rivals are increasingly pushing consulting services that show companies how to eliminate desktop printers and force workers to share multifunction devices that copy, print and fax.

Despite the woes, Mulcahy said Xerox has been increasing market share and expects that to continue "even in this challenging environment."

Debt reduction also is a focus, as it also is at numerous other firms during a time when the credit markets remained constrained and refinancing remains difficult for even the highest-rated borrowers. Xerox said debt levels will fall this year and plans are to continue paring it through the year. Since it has access to a $2 billion line of credit, the company plans to access the credit markets "only on an opportunistic basis."

Still, Standard & Poor's cut its ratings outlook on Xerox to negative from stable. Credit analyst Lucy Petricola said global economic weakness, reduced IT spending and "highly competitive industry conditions" will put pressure on Xerox's revenue and operating earnings in 2009.

Xerox will release its first-quarter results April 24, at which time it will also update its 2009 forecast.

-By Mike Barris and Jerry A. DiColo, Dow Jones Newswires; 201-938-5670; mike.barris@dowjones.com; jerry.dicolo@dowjones.com