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Xerox Fourth-Quarter Net Income Gains on Color Demand
Jan.
08 — Xerox Corp., the world’s largest maker of high-speed color
printers, said fourth-quarter earnings rose 79 percent, more than
analysts estimated, on increased sales of color devices and supplies.
Xerox rose the most in more than two years in New York trading.Net
income climbed to $382 million, or 41 cents a share, from $214 million,
or 22 cents, a year earlier, when results included a 16-cent
restructuring charge, the Norwalk, Connecticut-based company said today
in a statement. Sales increased 11 percent to $4.88 billion and the
company today extended its share buyback program by $1 billion.Xerox
boosted color revenue 14 percent by adding devices that print, copy,
fax and scan, and expanded document-management services into
paper-intensive industries such as finance and health care. Sales of
toner, paper and supplies rose 13 percent, much like companies that
produce shaving razors benefit from selling blades later, an analyst
said.“The razor/razor blade model is working very well for Xerox,”
said Shannon Cross, an analyst with Cross Research in Livingston, New
Jersey. She has a “buy” rating on the stock. “They’ve been growing
their install base for some time, and it’s paying off.”Xerox rose 80
cents, or 6 percent, to $14.05 at 9:53 a.m. in New York Stock Exchange
composite trading, and earlier reached $14.25 in the largest gain since
Oct. 21, 2005. The stock has lost 16 percent in the past 12 months.The
average of eight analyst estimates compiled by Bloomberg was for profit
of 40 cents a share on sales of $4.83 billion. Xerox forecast earnings
of 39 to 41 cents in October.First-quarter earnings may be 25 cents to
28 cents a share, the company forecast today. Analysts expect profit of
27 cents.New Devices
Xerox is relying on supplies for a
greater percentage of its sales. Chief Executive Officer Anne Mulcahy
said earlier this month that companies may slow technology investments
because of concerns of a U.S. recession.Color sales climbed 14 percent
to $1.84 billion, accounting for 40 percent of total revenue. Xerox
introduced 18 color devices last year and a total of 39 products. Xerox
said more than 40 billion color pages, five times as profitable than
black-and-white, were printed on its systems in 2007, up from 30
billion a year earlier.Revenue from toner, paper and supplies, which
accounted for 65 percent of sales in the quarter, rose 13 percent to
$3.15 billion. Equipment sales increased 10 percent to $1.53
billion.The growth helped restore profitability and the company’s
investment-grade debt rating as Xerox boosted operating cash flow to
$1.5 billion. Mulcahy reinstated a quarterly dividend of 4.25 cents in
November, the first payout since 2001.Operating cash flow rose to $1.01
billion in the quarter from $720 million a year earlier.Today’s $1
billion extension to the share repurchase program adds to $370 million
remaining on the original authorization of $2.5 billion approved in
October 2005. Xerox has bought back 137 million shares, or 13 percent
of the outstanding stock, since then.
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