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Xerox Q1 Profit Drops, But Services Revenues Rise; Backs Forecast

Xerox Q1 Profit Drops, But Services Revenues Rise; Backs Forecast
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4/23/2012 9:07 AM ET

Xerox Corp. (XRX: Quote), which is now more of a business services provider, said its first-quarter profit declined 4 percent, but its services revenues rose 10 percent from last year. Adjusted earnings matched analysts' estimates. The printer and copier maker sees short-term pressure on margins, yet reaffirmed its full-year view.

Ursula Burns, chairman and chief executive officer of the company said, "Services now represents more than half of our total revenue and will continue to be the growth engine of our company as we expand our BPO offerings and strengthen our leadership in managed print services."

Revenue from its technology business dropped 5 percent at constant currency, hurt by the weak macro environment as well as clients' increasing shift to Xerox managed print services. Installs of Xerox products were up 7 percent from last year.

Technology segment includes sale of products and supplies, as well as the associated technical service and financing of those products. Revenues from equipment sales declined 2 percent to $811 million.

In the first quarter, net income attributable to the company declined 4 percent to $269 million from $281 million reported last year. On a per-share basis, earnings remained flat at $0.19 on lower share count.

Adjusted net income per share, which excluded a $0.04 one-time charge, remained flat at $0.23 per share and matched the average estimate of 10 analysts polled by Thomson Reuters. Analysts' estimates typically exclude one-time items.

Total revenues for the quarter increased 1 percent to $5.50 billion $5.46 billion a year earlier. Revenues were up 2 percent at constant currency. Eight analysts estimated revenues of $5.45 billion for the quarter.

"Our first-quarter results reflect the successful execution of our strategy: accelerate services, grow our install base of Xerox color products, and efficiently operate our business to deliver strong earnings and shareholder value," Burns added.

Looking ahead to the second quarter, the company expects earnings per share to be in the range of $0.21 - $0.24 on a GAAP basis and $0.25 - $0.28 on an adjusted basis. Analysts anticipate second-quarter earnings of $0.26 per share.

For full-year 2012, Xerox continues to expect GAAP earnings per share of between $0.97 and $1.03 and adjusted earnings in the range of $1.12 to $1.18 per share. Twelve analysts project earnings of $1.13 per share for 2012.

XRX closed Friday's regular trading at $7.87 on the NYSE. In the pre-market activity, the shares are up 1.65 percent.

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by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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