XEROX:TONER SUPPLIES SALE UP 13% !

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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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January 24, 2008 at 11:41 AM