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 user 2006-07-31 at 2:17:00 pm Views: 47
  • #16009

    Xerox Second-Quarter Net Income Falls 39%; Revenue Gains 1.4%
    06– Xerox Corp., the fourth-largest seller of printers and copiers in
    the U.S., said second-quarter profit dropped 39 percent.

    income fell to $260 million, or 26 cents a share, from $423 million, or
    40 cents, a year earlier, when a tax gain buoyed results. Sales rose
    1.4 percent to $3.98 billion, the Stamford, Connecticut-based company
    said today in a regulatory filing.Chief Executive Officer Anne Mulcahy
    is focusing on digital copiers and printers to revive growth and is
    seeking to shore up sales of supplies such as toner and paper, which
    are more profitable than the machines. She has eliminated 20,000 jobs
    since taking over in 2001, paid down $11.5 billion in debt and hired
    other companies to make Xerox products.“They’re getting the installed
    base in shape, but they have to get it reflected in earnings per
    share,” said Shannon Cross, an analyst at Cross Research in Short
    Hills, New Jersey. She rates the shares “buy” and said she doesn’t
    own them. “The challenge is to see growth in post-sale revenue.”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.
    Thomson doesn’t disclose the basis of its estimates to Bloomberg News.
    Xerox in April forecast 22 cents to 24 cents.Xerox shares rose 35 cents
    yesterday to $13.65 in New York Stock Exchange composite trading and
    have dropped 6.8 percent this year. Shares of Palo Alto,
    California-based Hewlett-Packard Co., the largest printer maker, have
    gained 8.5 percent in 2006.

    Sliding Share
    Xerox has fallen to
    fourth in both U.S. copier and printer sales, according to Stamford,
    Connecticut-based researcher Gartner Inc. The company trails Tokyo’s
    Canon Inc., Hewlett- Packard and Konica Minolta Holdings Inc. in
    copiers and lags behind Hewlett-Packard, Konica Minolta and Round Rock,
    Texas- based Dell Inc. in printers.Mulcahy, 53, is shifting to digital
    color technology as sales of its analog machines decline. Color pages
    are five times as profitable as black-and-white, she said in
    April.Almost three-quarters of Xerox’s revenue comes from supplies and
    service contracts, or post-sale revenue, whose timing lags behind sales
    of equipment. As the placement of color machines grows, Xerox says
    profit margins will rise.Xerox is second in U.S. sales of high-end
    color copiers and printers, systems that run 41 pages per minute,
    Gartner said. The company trails Tokyo-based Konica Minolta in the

    Mulcahy’s Efforts
    Since Mulcahy took over in 2001,
    Xerox has posted four straight profitable years, and net income last
    year was the highest since 1997. In June, Xerox agreed to buy closely
    held Amici LLC for $174 million to add research tools for lawyers. It
    marked Mulcahy’s first acquisition since becoming CEO.She has
    outsourced manufacturing of cheaper copiers and printers to
    Singapore-based Flextronics International Ltd. and Fuji Xerox Co., a
    joint venture with Fuji Photo Film Co. of Tokyo. She also shifted
    financial management of equipment leases to Fairfield,
    Connecticut-based General Electric Co.