*NEWS*COLOR MAY PUT XEROX IN THE BLACK

Color May Put Xerox In The Black
At
first blush, Xerox’s second-quarter report card shows a company making
slow progress toward a turnaround. But Chief Executive Anne Mulcahy
said the company will have brighter days ahead, due to the inroads it
is making in the color printing business.The Stamford, Conn., company
saw slow but steady 1.4% revenue growth, from $3.92 billion to $3.98
billion, year over year. Profit was down 39%, from $423 million to $260
million; the previous year, the company had enjoyed a one-time tax
benefit. Overall, hardware sales revenue remained flat, while
consistently more profitable supplies and services rose 3%.But the
writing on the wall is in color. Revenue from color systems revenue
grew 14%, representing 34% of the company’s total revenue. And 44% of
equipment sales came from color devices–a trend Xerox intends to bank
on. By concentrating on its office and wide-format printing segments,
the company will continue to improve its color margins, Mulcahy said
during a Web conference Tuesday morning.
Between 2004 and 2005, the
U.S. color laser market saw unit sales increase 67%. And though unit
prices are dropping, revenue is still expected to grow at a 12%
compounded annual rate between 2005 and 2010, from $1.08 billion to
$1.92 billion, according to technology research firm InfoTrends.
That’s
good news for companies trying to make a profit in the $47 billion
printer market–a lucrative though very mature marketplace.
“It’s a
challenge for any vendor,” says Robert Palmer, digital printer analyst
at InfoTrends. “They have to find the pockets of opportunity.”

Xerox’s Profit Slides but Beats Estimates
The
Xerox Corporation’s second-quarter earnings fell a less-than-expected
39 percent, helped by new products and higher demand for color copiers
and printers.Net income fell to $260 million, or 26 cents a share, from
$423 million, or 40 cents a share, a year earlier, when a tax gain
buoyed results. Sales rose 1.4 percent, to $3.98 billion, the company
said yesterday.Excluding the tax benefit and some costs, profit in last
year’s second quarter was $210 million, or 20 cents a share. Sales in
the year-ago quarter were $3.92 billion.The chief executive, Anne M.
Mulcahy, is focusing on digital copiers and printers to revive growth
and is seeking to add to revenue from supplies like toner and paper,
which are more profitable than the machines. Sales of color systems,
which generate more profit, rose 14 percent last quarter.“It’s a big
ship and it takes a while to turn, but it’s beginning to turn,” said
Shannon Cross, an analyst at Cross Research in Short Hills, N.J.Ms.
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. In
April, Xerox forecast 22 cents to 24 cents.Shares of Xerox rose 40
cents, to $14.05