*NEWS*XEROX PROFIT SLIDES SHARPLY

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*NEWS*XEROX PROFIT SLIDES SHARPLY

 user 2005-10-21 at 11:51:00 am Views: 63
  • #13868

    Xerox Profit Slides Sharply on Charges
    STAMFORD,
    Conn. OCT 05  – Copier and printer maker Xerox Corp. on Friday said
    third-quarter profit slid sharply on litigation and other one-time
    charges, but the results excluding those items met Wall Street
    expectations.
    Net income after preferred dividends declined to $49
    million, or 5 cents per share, for the three months ended Sept. 30 from
    $149 million, or 17 cents per share, in the same quarter last year. The
    latest results include litigation charges of 12 cents per share, as
    well as a restructuring expense of 1 cent per share and other items.
    Xerox
    said adjusted earnings were $188 million, or 18 cents per share – on
    par with analysts’ consensus estimate, according to a Thomson Financial
    poll.
    Revenue edged higher to $3.76 billion, up 1 percent from $3.72
    billion a year ago but slightly below analysts’ target of $3.79
    billion. Xerox said sales of its color technology were particularly
    strong, growing 22 percent year-over-year. Overall, post-sale and
    financing revenue, which represents roughly 70 percent of the company’s
    total sales, rose 1 percent, while equipment sales increased 2 percent.
    Xerox
    forecast fourth-quarter earnings of 25 cents to 29 cents per share,
    including expected restructuring charges of 5 cents per share. Analysts
    expect income excluding items of 32 cents per share
    Separately, the
    company announced a plan to repurchase up to $500 million in common
    stock – its first buyback program in about eight years. Xerox has about
    959.5 million shares outstanding.

    PDTE 3-Xerox digital sales gains, buyback booST SHares
    NEW
    YORK,Oct 05- Xerox Corp. on Friday posted strong quarterly sales of
    digital copier supplies and services and said it would buy back shares
    for the first time in nearly eight years, fueling optimism about the
    office equipment maker and driving its stock up more than 5 percent.
    The
    $500 million buyback capped a quarterly report that included in-line
    net income and revenue and indications of success in the company’s plan
    to drive profits by introducing new color digital printers and document
    management devices.
    Xerox also plans to buy back up to $500 million
    of its common stock over the next 12 months. Analysts said the
    repurchase plan was a sign of confidence by Xerox’s board.
    “We
    announced a share repurchase program, evidence of the strength of our
    financial position and our commitment to providing increased returns
    for our shareholders,” Xerox Chief Financial Officer Larry Zimmerman
    said on a conference call. “We fully expect that the trends you see
    today will continue.”
    Sales of color printers over time yield
    five-times the revenue of black-and-white systems, Xerox said, fueled
    by service contracts and supplies like paper and replacement ink and
    toner.
    Xerox, best known for its office copiers, said third-quarter
    net income fell to $49 million, or 5 cents a share, including charges
    and other items, from $149 million, or 17 cents a share, a year earlier.
    Excluding
    costs of litigation, losses from Hurricane Katrina and other one-time
    charges, Xerox earned 18 cents a share, meeting analysts’ average
    expectation, according to Reuters Estimates.
    Total revenue rose 1 percent to $3.76 billion, just shy of analysts’ estimate of $3.80 billion.
    Over
    the past two years, the Stamford, Connecticut, company has unveiled new
    digital printers and office systems and taken market share from
    competitors, but is still struggling to boost revenue growth in a slow
    sales market, where pricing pressures have cut into profit margins.
    Xerox has said that over time, it expects digital sales to yield higher
    margin profits.
    Third-quarter total equipment revenue rose by 2
    percent, fueled by demand for supplies and service for its newer
    digital and color products, which offset declines from similar sales to
    customers who still have older models.
    Xerox said total color revenue in the quarter rose by 22 percent, and now represent 30 percents of its total sales.
    “It
    was a solid quarter where the growth in color was very strong,” said
    Cross Research analyst Shannon Cross, who rates the stock at “buy.”
    “They have seen strong equipment revenue growth over the last two years
    and now with positive post-sale revenue growth, we can see they are
    starting to grow their installed base.”
    Xerox added that it reduced
    its debt by about $700 million during the third quarter, and that total
    debt was down $3.3 billion from one year ago.
    Looking ahead, Xerox
    forecast fourth-quarter earnings per share based on generally accepted
    accounting principles (GAAP) in the range of 25-29 cents, including
    restructuring charges of 5 cents per share. Excluding the charge, its
    sees 30-34 cents. It sees full year revenue up by about 1 percent.
    Analysts
    were expecting a fourth-quarter profit on a GAAP basis of 28 cents a
    share. Excluding one-time costs, they had on average forecast a profit
    of 32 cents a share, according to Reuters Estimates.
    Xerox shares
    rose 69 cents, or 5.6 percent, to $13.10 on Friday on the New York
    Stock Exchange. The stock, which hit a 52-week low of $12.40 on
    Thursday, had slipped more than 8 percent over the past three months.
    The
    stock trades at about 13.7 times estimated 2005 earnings, compared with
    a 23.2 multiple for the Merrill Lynch Technology 100 Index.