XEROX CUTS PROFIT OUTLOOK BY 80%

[Anonymous]

http://www.forbes.com/2009/03/20/xerox-print-earnings-markets-equity-office.html
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.
On
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.

The
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%

[Author]

March 25, 2009 at 3:25 PM