Document technology and business process services provider Xerox Corp. (XRX) Tuesday reported higher first-quarter profit, even as sales slipped 3 percent, benefiting from lower income tax expense. Adjusted earnings topped Wall Street estimates while revenues came short of view. The company forecast second-quarter earnings below Street estimates.
Ursula Burns, CEO, said, "While results in our services business align with our growth strategy and our expectations, challenges in our document technology business continued during the first quarter."
Revenue from the company's document technology business was down 9 percent, which had an adverse impact on segment margin, she added.
Net income attributable to the company increased to $296 million or $0.23 per share from last year's $269 million or $0.19 per share.
Excluding 4 cents related to amortization of intangibles, adjusted net income attributable to Xerox was $347 million or $0.27 per share, including a benefit of about $0.02 per share resulting from a reserve reduction related to litigation developments. Adjusted earnings totaled $0.23 per share last year.
On average, 10 analysts polled by Thomson Reuters expected earnings per share of $0.24 for the quarter. Analysts' estimates typically exclude one-time items.
Total revenues slid 3 percent to $5.36 billion from $5.50 billion. Analysts estimated revenues of $5.50 billion for the quarter.
Sales declined 9 percent to $1.446 billion, while revenue from Outsourcing, maintenance and rentals rose 1 percent to $3.79 billion.
Revenue from the company's services business was up 4 percent at $2.92 billion, representing 55 percent of total revenue. Document Technology revenues fell nearly 9 percent to $2.135 billion.
Income tax expense dropped 32 percent to $52 million. Effective tax rate was 17 percent, compared to 24.6 percent last year.
Looking ahead to the second quarter, the company expects earnings per share to lie between $0.19 and $0.21 on a GAAP basis, and between $0.23 and $0.25 on an adjusted basis. Wall Street projects second-quarter earnings per share of $0.26.
The company plans a higher level of restructuring activities in the second quarter, and has included 2 cents of restructuring in this guidance.
For 2013, Xerox still sees earnings per share in the range of $0.94 to $1.00 on a GAAP basis, and $1.09 to $1.15 on adjusted basis. Analysts estimate full-year earnings per share of $1.12.
XRX closed at $8.60 on Monday. The stock is falling 0.6 percent in pre-market activity.
by RTT Staff Writer
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