*NEWS*XEROX Q1,2007 EARNINGS UP 17 % !
*NEWS*XEROX Q1,2007 EARNINGS UP 17 % !
2007-04-23 at 12:08:00 pm #17886
Xerox Q1 earnings up nearly 17 percent
HARTFORD, Conn.Xerox profits jumped nearly 17 percent in the first quarter of the year to $233 million, the company announced Friday, on the strength of solid revenue gains and cost-cutting measures.
Earnings per share were 24 cents, up from 20 cents in the first quarter of 2006. Analysts polled by Thomson Financial predicted profit of 20 cents per share.Revenue was up by 4 percent, to $3.8 billion, a reversal from a 2 percent loss in the same quarter last year.The Stamford-based copier and office equipment manufacturer also said per-share earnings for the year are expected to come in at the high end of a $1.12-$1.16 range.Shares of Xerox traded at $18.51, up 43 cents, or about 2.4 percent, in afternoon trading on the New York Stock Exchange.”We started this year with good momentum on revenue and 20 percent on (earnings per share),” Mulcahy told investor analysts in a conference call Friday. “We’re bringing new technology to the market at a good pace, already surpassing launches last year.”Mulcahy said that since the beginning of the year, Xerox has introduced 19 products, half of which are color products. The company plans to more than double its number of product launches this year, she said.Revenue from post-sales activities yielded a “huge gain for Xerox,” Larry Zimmerman, chief financial officer, said in an interview.Post-sale and financing revenue increased by 6 percent. Xerox’s annuity streams — revenue from equipment servicing and the sale of supplies such as copier toner and printer inks — represent more than 70 percent of total revenue, the company said.
Jack Kelly, an analyst at Goldman Sachs & Co., said the company did a good job pushing down costs, particularly in selling, administrative and general expenses. Costs for the quarter in that segment were $954 million, down 3 percent from $983 million in the same quarter last year.Xerox’s better-than-expected earnings performance was largely a function of cost control, he said.”The cost performance for the quarter was superb,” Kelly said.Total costs of $3.5 billion, up 1 percent, were lower than expected, he said.However, due to pricing pressure, equipment sales were down 2 percent, Xerox said.”Their competition is increasing,” said Jeff Embersits, chief investment officer at Shareholder Value Management in Belmont, Calif. “The pricing environment is getting more difficult.”
Zimmerman said price pressures are not unusual.
“Year after year, quarter after quarter, you get better price performance for what you buy,” he said. “It’s normal competition in the marketplace for the equipment side of the business.”Xerox agreed earlier this month to acquire Global Imaging Systems for $1.5 billion, which should give the company access to about 200,000 new customers and increase its distribution in the United States to small- and mid-sized customers by 50 percent. The purchase is expected to close next monthNaveed Yahya, chief investment officer of Fischer Investment Group in Pittsford, N.Y., said the acquisition is paying off.”It’s encouraging they went out and shook things up and made an acquisition,” he said. “It’s something they need to do. Competitors are coming out with a lot of things, too. It’s what they need to do to remain ahead of the game.”A restructuring charge for Fuji Xerox Co., the office equipment manufacturer, was 2 cents, less than the 3 cents that was expected.Xerox has a 25 percent stake in Fuji Xerox Co., a partnership that markets Xerox products in Japan and other countries in the Pacific Rim.Xerox has cut its work force and is moving later this year from its Stamford headquarters to nearby Norwalk. It employs about 300 people at its Stamford offices, down from 600 seven years ago. The company’s total work force at the end of last year was 53,700.