Published October 23, 2012
Xerox (XRX) revealed a 12% decline in third-quarter profit and disappointing revenue on Tuesday as equipment sales slid, and it warned of a possible $100 million restructuring charge in the current quarter.
The company, which is best known for its copiers but has been shifting to business services amid softening equipment and supplies sales, posted net income for the three months ended Sept. 30 of $282 million, or 21 cents a share, compared with a year-earlier $320 million, or 22 cents.
Excluding one-time items, Xerox said it earned 25 cents, matching average analyst estimates in a Thomson Reuters poll.
“Our third-quarter performance aligns with shifts in our business as services become a larger proportion of our revenue, and reflects the dynamics of a challenging economy that is creating cost pressures for large enterprises and governments,” Xerox CEO Ursula Burns said in a statement. “Steady growth in services is consistent with our strategy.”
Xerox jumped into the world of services when it bought Affiliated Computer Services in 2009 for $5.5 billion. Despite the continued transition, revenue fell 3% to $5.4 billion, narrowly below the Street’s view of $5.49 billion.
Sales declined by 12% to $1.54 billion, led by a 7% constant-currency decrease in technology revenue. Its now-larger outsourcing, service and rentals business grew by just 1% to $3.7 billion.
During the current quarter, Xerox said it will take a restructuring charge in the range of $50 million to $100 million.
Shares of Xerox fell more than 7.2% to $6.52.
Xerox is anticipating non-GAAP earnings of 33 cents to 35 cents, bracketing the consensus of 34 cents. In fiscal 2012, it sees earnings excluding special items ranging from $1.07 to $1.09, in line with the Street’s $1.08 view.