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 user 2009-03-25 at 3:25:56 pm Views: 38
  • #22173
    Xerox Fading
    Printer and copier maker cut its Q1 earnings forecast more than 80%.
    With its earnings prospects fading, Xerox will try to stay in the black by keeping a lid on costs.
    Friday, Xerox  said it expects to earn between 3 and 5 cents per share
    in the first quarter, down sharply from its previously announced
    forecast for 16 to 20 cents per share and well below Wall Street’s
    expectations for 18 cents. Xerox shares dropped 89 cents, or 16.7%, to
    $4.45, in early-afternoon trading in New York, following the Norwalk,
    Conn.-based firm’s announcement that the slowdown in office equipment
    spending squeezed revenue and undercut its cost-saving actions.”We
    expect that global economic weakness, reduced information technology
    spending, and highly competitive industry conditions will pressure
    Xerox’s revenues, operating earnings, and leverage profile in fiscal
    2009,” said Standard & Poor’s credit analyst Lucy Patricola.
    S&P maintained its BBB long-term rating but lowered its outlook for
    Xerox to negative.

    Xerox customers, struggling to remain
    profitable during the current global economic downturn, have cut costs
    either by reducing orders or opting for low-end models, which are not
    highly profitable. Xerox’s most profitable business, revenue from ink
    and other supply sales for its customers, has also taken a beating.

    company plans to trim costs by $300.0 million, on top of the $250.0
    million it previously planned, and has cut 3,000 jobs as part of a
    restructuring announced last year. It will also slash travel expenses,
    freeze salaries, temporarily suspend matching for its U.S. 401(k)
    plans, cut overtime pay and halt hiring. No additional job cuts are
    planned at the moment, a spokesman said.

    Xerox is not alone in
    its struggles. Earlier this month, Japan’s Canon cut its 2010 profit
    target to account for tumbling demand for its cameras and copiers as
    the global economic crisis hits its major export markets. That same
    week, rival Ricoh cut its mid-term earnings goals, but the reduction
    was less than investors had expected, helped by overseas acquisitions
    in recent years. Still, both firms have been losing value.Comment On
    This StoryOn Friday, American depositary receipts of Canon fell 62
    cents, to $27.44, while Ricoh ADRs were down $1.00, to $56.00. Canon
    shares remain down 38.3% from their year-earlier price of $44.44, and
    Richoh is down 28.9%