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Xerox meets views on 19% profit decline
By Jordan Robertson
ASSOCIATED PRESS
Jul 24, 2008
SAN FRANCISCO - Xerox Corp.'s second-quarter profit skidded 19 percent, but matched Wall Street's forecast, as the office-equipment maker was hurt by restructuring charges while its cash-cow supplies and services business hummed along smoothly.The Norwalk, Conn.-based company makes most of its money from selling ink and other supplies to companies that have already bought Xerox printers, copiers and other machinery, a reliable business that grew 10 percent in the April-June period compared with last year.
The consistency of that business, coupled with the growing demand for expensive color ink and technical support to help companies manage their ever-expanding hordes of digital documents, helped Xerox expand in line with analyst expectations.
Xerox said Thursday that net income in the second quarter was $215 million, or 24 cents per share, down from the $266 million, or 28 cents per share, in the year-ago period. Analysts surveyed by Thomson Financial were expecting 24 cents per share in profit.
Were it not for previously announced restructuring charges, however, Xerox's profit would have been 5 cents per share higher, topping last year's figure by a penny per share. Xerox continues to cut costs as it looks for ways to improve its profitability.
The company did not detail what specifically the latest charges were for.
Sales were $4.53 billion, an 8 percent improvement over last year and exactly in line with analysts' average estimate.
Roughly 70 percent of Xerox's revenue comes from its so-called "post-sale" business, which contributed $3.37 billion in the second quarter. That was up 10 percent over the previous year. The number rises as Xerox's customers print more pages - especially color pages - on machines they already own and enlist more of Xerox's technical services.
Equipment sales, which are more vulnerable to economic pressures and swings in discretionary technology spending, grew just 2 percent to $1.16 billion. Instead of focusing on selling more new equipment, Xerox relies more heavily on its existing customer base consuming more of its products.
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