Connecticut: Xerox Corp. will continue to rely on fast-growing colour products to propel revenue and earnings despite the weakening U.S. economy, chief executive Anne Mulcahy told analysts Tuesday.
The general market in the U.S. is sluggish, with a lot of anxiety that is slowing business decisions, she said at the Merrill Lynch Technology Conference in New York.
The Norwalk-based office equipment manufacturer is well-positioned to weather the economic downturn, with more than half its revenue overseas and with diversified businesses, she said.
Colour pages are the fastest growing new printing business, and Xerox’s small-to-medium business market is doing well, she said.
Xerox lost $244 million in Q1, when it reported results 18April. Last month it took a $60 million restructuring charge, or 5 cents a share, in Q2 to speed up cost-cutting in an effort to make distribution more efficient. Xerox also needs to cut costs in the face of a weakening economy, Mulcahy said in April.
Analyst Shannon Cross of Cross Research said Tuesday that the weak economy means office equipment manufacturers will typically cut costs by extending office equipment leases rather than buying new machines.
Cost cutting, possible acquisitions to beat the trend
Xerox is consolidating some distribution centres, Cross said. The cost-cutting was planned, but is being pushed forward. Mulcahy told analysts Tuesday that Xerox will cut general and administrative costs rather than slice into research and development or sales activities.
Xerox will continue to look at possible acquisitions of businesses that process legal, mortgage and healthcare documents, she said. Xerox already owns companies in those areas.
Xerox’s purchase last year of Global Imaging Systems in Tampa, Fla., to help Xerox increase its U.S. distribution to small- and mid-sized customers, has been a success, Mulcahy said. Global Imaging Systems has bought four office equipment dealers “so we bought an engine of growth,” she said.
Xerox shares closed at $14.60, up 22 cents, or 1.5%.
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