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 user 2008-10-23 at 10:51:38 am Views: 56
  • #20523
    Xerox to cut 5 pct of staff; 3Q profit beats views
    FRANCISCO – Xerox Corp. plans to cut 3,000 jobs, or 5 percent of its
    work force, because a slowdown in orders from large U.S. companies has
    dragged down the printer and copier maker’s profit margins.The
    restructuring the Norwalk, Conn.-based company announced Thursday will
    affect all departments except sales and is an example of how the
    economic turmoil is hurting companies outside the financial services
    industry.Xerox shares slid 37 cents, 4.6 percent, to $7.61 in morning

    Xerox had already been steadily cutting costs and jobs
    before the financial crisis dramatically worsened in the past month,
    but the sharp downturn intensified pressure on its profit margins and
    caused the company to accelerate its restructuring plans.Xerox said the
    cuts will lead to a $400 million charge. U.S.-based employees are being
    offered buyout packages, said Xerox spokesman Carl Langsenkamp.

    revealed the cuts as it reported that sales of new equipment weakened
    in the third quarter, dragged down by tightened spending budgets in the
    U.S. and Britain. The economic slowdown has hurt companies’ abilities
    to borrow money to buy new equipment, and many are clamping down on
    spending.Xerox managed to post a 2 percent increase in profit in the
    July-September quarter, topping Wall Street’s forecast by a penny per
    share. A big tax windfall helped Xerox offset slumping sales.

    revenue fell short of the consensus estimate, highlighting the damage
    caused by soft business spending.Xerox earned $258 million, or 29 cents
    per share, in the three months ended Sept. 30. That was a penny per
    share higher than the average estimate of analysts polled by Thomson
    Reuters. In the year-ago period, Xerox’s net income was $254 million,
    or 27 cents per share.Profits in the latest period were boosted by a
    $41 million tax settlement, which increased earnings per share by 4

    Xerox’s gross profit margin came in at 39.2 percent of
    revenue for the third quarter, down about one percentage point from the
    prior year. Gross margin measures a company’s profit on each dollar of
    revenue once manufacturing costs are stripped out. It’s an important
    measurement of how well a company is controlling its costs.Xerox’s
    sales grew just 2 percent, to $4.37 billion, short of the $4.47 billion
    that analysts polled by Thomson Reuters were expecting. Sales would
    have been flat were it not for the benefits from a weak U.S. dollar.

    sales, which make up about a quarter of Xerox’s overall business, were
    down 3 percent to $1.13 billion.A much bigger and more lucrative part
    of Xerox’s business — so-called “post-sale” revenue, which refers to
    the sale of ink and other supplies to companies that have already
    bought or leased Xerox machines — grew 3 percent to $3.25 billion. That
    segment makes up nearly three-quarters of Xerox’s sales.

    Mulcahy, Xerox’s chief executive, said in a statement that the job cuts
    are necessary to give Xerox more flexibility in an unpredictable
    economy.”We believe the operational efficiencies we’ll gain from our
    restructuring actions in the fourth quarter position us well to deliver
    double-digit earnings growth in 2009,” she said.The restructuring
    charges are expected to reduce net income by 31 cents per share.
    Excluding those charges, Xerox expects profit in the range of 34 cents
    per share to 36 cents per share. Analysts surveyed by Thomson Reuters
    had expected the company to earn 43 cents per share for the fourth