XEROX TO LAY-OFF 3,000 EMPLOYEES

[Anonymous]

http://news.moneycentral.msn.com/category/topicarticle.aspx?feed=AP&Date=20081023&ID=9313351&topic=TOPIC_EARNINGS_RESULTS&isub=1
Xerox to cut 5 pct of staff; 3Q profit beats views
SAN
FRANCISCO – Xerox Corp. plans to cut 3,000 jobs, or 5 percent of its
work force, because a slowdown in orders from large U.S. companies has
dragged down the printer and copier maker’s profit margins.The
restructuring the Norwalk, Conn.-based company announced Thursday will
affect all departments except sales and is an example of how the
economic turmoil is hurting companies outside the financial services
industry.Xerox shares slid 37 cents, 4.6 percent, to $7.61 in morning
trading.

Xerox had already been steadily cutting costs and jobs
before the financial crisis dramatically worsened in the past month,
but the sharp downturn intensified pressure on its profit margins and
caused the company to accelerate its restructuring plans.Xerox said the
cuts will lead to a $400 million charge. U.S.-based employees are being
offered buyout packages, said Xerox spokesman Carl Langsenkamp.

Xerox
revealed the cuts as it reported that sales of new equipment weakened
in the third quarter, dragged down by tightened spending budgets in the
U.S. and Britain. The economic slowdown has hurt companies’ abilities
to borrow money to buy new equipment, and many are clamping down on
spending.Xerox managed to post a 2 percent increase in profit in the
July-September quarter, topping Wall Street’s forecast by a penny per
share. A big tax windfall helped Xerox offset slumping sales.

But
revenue fell short of the consensus estimate, highlighting the damage
caused by soft business spending.Xerox earned $258 million, or 29 cents
per share, in the three months ended Sept. 30. That was a penny per
share higher than the average estimate of analysts polled by Thomson
Reuters. In the year-ago period, Xerox’s net income was $254 million,
or 27 cents per share.Profits in the latest period were boosted by a
$41 million tax settlement, which increased earnings per share by 4
cents.

Xerox’s gross profit margin came in at 39.2 percent of
revenue for the third quarter, down about one percentage point from the
prior year. Gross margin measures a company’s profit on each dollar of
revenue once manufacturing costs are stripped out. It’s an important
measurement of how well a company is controlling its costs.Xerox’s
sales grew just 2 percent, to $4.37 billion, short of the $4.47 billion
that analysts polled by Thomson Reuters were expecting. Sales would
have been flat were it not for the benefits from a weak U.S. dollar.

Equipment
sales, which make up about a quarter of Xerox’s overall business, were
down 3 percent to $1.13 billion.A much bigger and more lucrative part
of Xerox’s business — so-called “post-sale” revenue, which refers to
the sale of ink and other supplies to companies that have already
bought or leased Xerox machines — grew 3 percent to $3.25 billion. That
segment makes up nearly three-quarters of Xerox’s sales.

Anne
Mulcahy, Xerox’s chief executive, said in a statement that the job cuts
are necessary to give Xerox more flexibility in an unpredictable
economy.”We believe the operational efficiencies we’ll gain from our
restructuring actions in the fourth quarter position us well to deliver
double-digit earnings growth in 2009,” she said.The restructuring
charges are expected to reduce net income by 31 cents per share.
Excluding those charges, Xerox expects profit in the range of 34 cents
per share to 36 cents per share. Analysts surveyed by Thomson Reuters
had expected the company to earn 43 cents per share for the fourth
quarter.

[Author]

October 23, 2008 at 10:51 AM