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 user 2007-04-23 at 12:09:00 pm Views: 40
  • #17887

    Xerox Q1 earnings up nearly 17 percent
    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.
    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.
    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.