*NEWS*COLOR MAY PUT XEROX IN THE BLACK

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*NEWS*COLOR MAY PUT XEROX IN THE BLACK

 user 2006-07-27 at 12:01:00 pm Views: 66
  • #16258

    Color May Put Xerox In The Black
    At
    first blush, Xerox’s second-quarter report card shows a company making
    slow progress toward a turnaround. But Chief Executive Anne Mulcahy
    said the company will have brighter days ahead, due to the inroads it
    is making in the color printing business.The Stamford, Conn., company
    saw slow but steady 1.4% revenue growth, from $3.92 billion to $3.98
    billion, year over year. Profit was down 39%, from $423 million to $260
    million; the previous year, the company had enjoyed a one-time tax
    benefit. Overall, hardware sales revenue remained flat, while
    consistently more profitable supplies and services rose 3%.But the
    writing on the wall is in color. Revenue from color systems revenue
    grew 14%, representing 34% of the company’s total revenue. And 44% of
    equipment sales came from color devices–a trend Xerox intends to bank
    on. By concentrating on its office and wide-format printing segments,
    the company will continue to improve its color margins, Mulcahy said
    during a Web conference Tuesday morning.
    Between 2004 and 2005, the
    U.S. color laser market saw unit sales increase 67%. And though unit
    prices are dropping, revenue is still expected to grow at a 12%
    compounded annual rate between 2005 and 2010, from $1.08 billion to
    $1.92 billion, according to technology research firm InfoTrends.
    That’s
    good news for companies trying to make a profit in the $47 billion
    printer market–a lucrative though very mature marketplace.
    “It’s a
    challenge for any vendor,” says Robert Palmer, digital printer analyst
    at InfoTrends. “They have to find the pockets of opportunity.”

    Xerox’s Profit Slides but Beats Estimates
    The
    Xerox Corporation’s second-quarter earnings fell a less-than-expected
    39 percent, helped by new products and higher demand for color copiers
    and printers.Net income fell to $260 million, or 26 cents a share, from
    $423 million, or 40 cents a share, a year earlier, when a tax gain
    buoyed results. Sales rose 1.4 percent, to $3.98 billion, the company
    said yesterday.Excluding the tax benefit and some costs, profit in last
    year’s second quarter was $210 million, or 20 cents a share. Sales in
    the year-ago quarter were $3.92 billion.The chief executive, Anne M.
    Mulcahy, is focusing on digital copiers and printers to revive growth
    and is seeking to add to revenue from supplies like toner and paper,
    which are more profitable than the machines. Sales of color systems,
    which generate more profit, rose 14 percent last quarter.“It’s a big
    ship and it takes a while to turn, but it’s beginning to turn,” said
    Shannon Cross, an analyst at Cross Research in Short Hills, N.J.Ms.
    Cross expected profit of 24 cents a share, a penny ahead of the 23-cent
    average estimate of nine analysts in a survey by Thomson Financial. In
    April, Xerox forecast 22 cents to 24 cents.Shares of Xerox rose 40
    cents, to $14.05