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 user 2007-01-24 at 3:02:00 pm Views: 64
  • #17094

    Xerox Net Income Declines 24%
    07 — Xerox Corp., the world’s largest maker of high-speed color
    printers, said fourth-quarter earnings fell 24 percent because of costs
    to fire workers and close plants.Net income slipped to $214 million, or
    22 cents a share, from $282 million, or 27 cents, a year earlier,
    Stamford, Connecticut-based Xerox said today in a regulatory filing.
    Excluding some costs, profit was 38 cents, beating analysts’ estimates.
    Revenue rose 3 percent to $4.38 billion, helped by favorable currency
    translation.Sales of color machines, which generate more profit than
    black-and-white models, rose 5 percent last quarter, while costs to
    fire 1,900 employees and move factories hurt earnings by 16 cents.
    Chief Executive Officer Anne Mulcahy, who has cut 20,000 jobs since
    taking over in August 2001, is relying on toner and paper to provide a
    steadier source of revenue than equipment.“I would like higher revenue
    growth, but there’s only so much you can get out of this industry,”
    said Naveed Yahya, chief investment officer of Fischer Investment Group
    in Pittsford, New York, which owns more than 50,000 shares and has held
    Xerox for more than six years. “If they can get up to 5 percent sales
    growth, my comfort level would be higher.”Xerox, which competes with
    Hewlett-Packard Co. and Canon Inc., expects profit this quarter to be
    21 to 23 cents a share, compared with the 22-cent estimate of six
    analysts surveyed by Bloomberg.Shares of Xerox fell 15 cents to $16.55
    at 10:31 a.m. in New York Stock Exchange composite trading and had
    gained 16 percent in the past year before today.

    Laser Printers
    quarter marked the third straight period Xerox has exceeded analysts’
    projections. Chris Whitmore, a Deutsche Bank analyst in San Francisco,
    anticipated 36 cents a share, matching the average of seven analysts
    surveyed by Bloomberg. Sales estimates were $4.35 billion.Since
    becoming CEO, Mulcahy, 54, has paid down $11.5 billion in debt and
    hired outside companies to make Xerox products to reduce operating
    costs. She plans to roll out twice as many new products this year as in
    2006.“It was a year of steady improvement across the board, and we’re
    ready to do it again,” Mulcahy said today on a conference call with
    analysts and investors.About two-thirds of Xerox’s equipment sales come
    from products introduced in the past two years. In November, the
    company started selling three new small-business products, including a
    desktop color laser printer, and plans to unveil several more office
    color systems next month.Xerox employed 53,700 at the end of last year,
    2.7 percent fewer employees than the previous year. The company
    incurred $239 million in restructuring and asset impairment costs last

    Color Systems
    still realigning their business model,” said Richard Stice, an analyst
    at Standard & Poor’s in New York, who has a “hold” rating on the
    shares and doesn’t own any. “They’re making positive steps, hoping to
    turn around their operations, focusing on the right markets.”Sales of
    toner, supplies and services rose 6 percent to $2.78 billion last
    quarter, as demand for color systems and consulting work lifted growth.
    Total equipment sales slipped 1 percent to $1.39 billion, dragged down
    by declines in black-and-white products and color
    printers.Color-systems revenue, which includes copiers, printers and
    supplies, rose 13 percent to $1.62 billion. In the past quarter, 37
    percent of the company’s sales were from color, up from 34 percent a
    year earlier. A color page is five times more profitable than one in
    black-and-white.Sales at the company’s production group, which sells
    high-speed printing systems to high-volume commercial customers, rose
    2.9 percent to $1.32 billion. Profit was little changed at $175 million
    as the company sold fewer higher-priced items.The office group, which
    sells networked copier and printer systems to corporations, rose less
    than 1 percent to $2.05 billion. Profit climbed 4.2 percent to $276
    million, as the compan
    y installed more color printers that can also copy, scan and fax.