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Xerox Cuts Q4 Outlook, Boosts Dividend - Update


Xerox Corp. (XRX) Tuesday slashed its earnings outlook for the fourth quarter, to reflect restructuring charges as the printer and copier maker curb expenses.

Nevertheless, the company boosted its dividend by 35 percent and raised its share buyback plan by $1 billion. The company also provided its earnings outlook for the next fiscal year, mid-point of which is expected to meet analysts' current estimates.

For the fourth quarter, Xerox now expect earnings of $0.24 to $0.26 per share, down from prior guidance of $0.29 or $0.31 per share.

Xerox now expects fourth-quarter adjusted earnings of $0.28 to $0.30 per share, down from the previous estimate of $0.33 to $0.35 per share.

Analysts polled by Thomson Reuters currently estimate earnings of $0.32 per share for the quarter. Analysts' estimates typically exclude one-time items.

Last month while reporting its third-quarter, the company had warned it would take a restructuring charge in order to improve its services business. Xerox noted that profitability of some contracts were affected by constraints in government spending, which delayed implementation of committed projects that required upfront investments from the company.

Xerox today noted it would take a charge of $100 million for the fourth quarter, at the upper end of previous estimate of $50 million to $100 million.

Chief Executive Ursula Burns said, "Transforming Xerox to a services-led business — now accounting for more than half of our revenue — is creating a strong foundation for Xerox's future."

For the full year 2013, Xerox expect earnings of $0.94 to $1.00 per share, and adjusted earnings of $1.09 to $1.15 per share. Wall Street currently expect full year earnings of $1.12 per share.

Xerox expects 2013 revenues to be flat to up 2 percent.

The New York-based company increased its quarterly dividend to 5.75 cents per share, from 4.25 per share. The next dividend is payable on April 30, 2013.

The company approved a $1 billion increase to the current authorization. Xerox said it plans to allocate at least $400 million in cash for share repurchase next year, adding to the $900 million to $1.1 billion in stock buyback planned for this year.

XRX is currently trading at $6.44, up $0.11 or 1.66%, on the NYSE.

by RTTNews Staff Writer

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