BackXerox Q2 profit beats estimates; revenue falls 18%
Xerox Q2 profit beats estimates; revenue falls 18%
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New York: Xerox Corp posted better-than-expected quarterly results helped by cost cutting, but said a slowdown in office equipment spending would continue to pinch revenue for the remainder of the year.
The world’s no. 1 supplier of digital printer and document management services on Thursday also forecast third quarter profit that fell shy of Wall Street analysts views.
Shares of Xerox were up 1% in thin premarket trade on Thursday, after the company posted second quarter net income of $140 million, or 16 cents a share, down from $215 million, or 24 cents a share, a year earlier.
That beat analysts’ expectations for a profit of 11 cents a share, according to Reuters Estimates.
Second quarter revenue declined 18% to $3.73 billion, which was marginally higher than the $3.72 billion expected by Wall Street.
Cost-cutting helped the company improve gross margins in the quarter to 40.2%, up 1% point from the prior year and up 1.3 points from the first quarter.
The company has pledged to keep trimming costs, and plans to reduce its overall debt by $1 billion this year.
Xerox attributed the revenue decline to “spending constraints" which has slowed buying decisions and demand for document-related supplies. As the global recession continues, some large clients have been hesitant about purchasing higher-end technology.
“Assuming current economic conditions persist, we expect revenue will remain under pressure during the balance of this year," said Xerox chief executive Ursula Burns, who assumed the role of chief executive this month.
Former CEO Anne Mulcahy, who has been credited with revitalizing Xerox following severe financial troubles earlier this decade, has stayed on as the company’s chairman.
The Norwalk, Connecticut-based company, whose rivals include Oce NV, Canon Inc and Ricoh Co Ltd, has in the past year scored solid profits and improved market share, but efforts to boost revenue have been derailed by the recession.
Xerox expects third-quarter earnings per share in the range of 10 cents to 12 cents, and now sees a 2009 profit of 50 cents to 55 cents.
Analysts were expecting a profit of 13 cents for the quarter and 51 cents for the full year.
Xerox shares were up 7 cents to $7.07 in light pre-market trade.
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