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AnonymousInactiveXerox Second-Quarter Net Income Falls 39%; Revenue Gains 1.4%
July
06– Xerox Corp., the fourth-largest seller of printers and copiers in
the U.S., said second-quarter profit dropped 39 percent.
Net
income fell to $260 million, or 26 cents a share, from $423 million, or
40 cents, a year earlier, when a tax gain buoyed results. Sales rose
1.4 percent to $3.98 billion, the Stamford, Connecticut-based company
said today in a regulatory filing.Chief Executive Officer Anne Mulcahy
is focusing on digital copiers and printers to revive growth and is
seeking to shore up sales of supplies such as toner and paper, which
are more profitable than the machines. She has eliminated 20,000 jobs
since taking over in 2001, paid down $11.5 billion in debt and hired
other companies to make Xerox products.“They’re getting the installed
base in shape, but they have to get it reflected in earnings per
share,” said Shannon Cross, an analyst at Cross Research in Short
Hills, New Jersey. She rates the shares “buy” and said she doesn’t
own them. “The challenge is to see growth in post-sale revenue.”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.
Thomson doesn’t disclose the basis of its estimates to Bloomberg News.
Xerox in April forecast 22 cents to 24 cents.Xerox shares rose 35 cents
yesterday to $13.65 in New York Stock Exchange composite trading and
have dropped 6.8 percent this year. Shares of Palo Alto,
California-based Hewlett-Packard Co., the largest printer maker, have
gained 8.5 percent in 2006.Sliding Share
Xerox has fallen to
fourth in both U.S. copier and printer sales, according to Stamford,
Connecticut-based researcher Gartner Inc. The company trails Tokyo’s
Canon Inc., Hewlett- Packard and Konica Minolta Holdings Inc. in
copiers and lags behind Hewlett-Packard, Konica Minolta and Round Rock,
Texas- based Dell Inc. in printers.Mulcahy, 53, is shifting to digital
color technology as sales of its analog machines decline. Color pages
are five times as profitable as black-and-white, she said in
April.Almost three-quarters of Xerox’s revenue comes from supplies and
service contracts, or post-sale revenue, whose timing lags behind sales
of equipment. As the placement of color machines grows, Xerox says
profit margins will rise.Xerox is second in U.S. sales of high-end
color copiers and printers, systems that run 41 pages per minute,
Gartner said. The company trails Tokyo-based Konica Minolta in the
market.Mulcahy’s Efforts
Since Mulcahy took over in 2001,
Xerox has posted four straight profitable years, and net income last
year was the highest since 1997. In June, Xerox agreed to buy closely
held Amici LLC for $174 million to add research tools for lawyers. It
marked Mulcahy’s first acquisition since becoming CEO.She has
outsourced manufacturing of cheaper copiers and printers to
Singapore-based Flextronics International Ltd. and Fuji Xerox Co., a
joint venture with Fuji Photo Film Co. of Tokyo. She also shifted
financial management of equipment leases to Fairfield,
Connecticut-based General Electric Co. -
AuthorJuly 31, 2006 at 2:17 PM
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