Disappointing Earnings Warning Sends Xerox Stock Tumbling 24%

Xerox Corp. shares fell 24% on Friday, the most in about two decades, after the company warned that it will report lower profit and stagnant sales for the third quarter.

Xerox fell $10.25 to close at $32.50 on the New York Stock Exchange and was the most actively traded stock in U.S. markets. Its market value has shrunk by almost half this year, to $21.6 billion.

The company said it expects earnings per share to be 10% to 12% less than the 53 cents it earned in the year-earlier quarter. Xerox was expected to earn 58 cents, the average estimate of analysts surveyed by First Call Corp. Revenue in the year-earlier period totaled $4.61 billion.

Sales at the world’s biggest copier maker are being hurt as Canon Inc. and other rivals push their products while Xerox’s sales force has been distracted by a reorganization.

The company hired Chief Executive G. Richard Thoman in 1997 to battle Canon and Hewlett-Packard Co. for dominance in the office-equipment industry as customers demand one machine that copies, prints, faxes and scans documents. Investors now say they can’t count on Xerox executives to meet forecasts, including a sales projection endorsed by the company just last month.

In April, Thoman unveiled a plan to remake Xerox’s image as a technology company instead of a copier maker. The shift, which involves realigning the sales force, is designed to let Xerox sell customized packages of consulting services, software and machines that the company says will generate half its revenue in the next decade.

Xerox said it now will release its third-quarter results Oct. 18, three days earlier than planned.

“We owe you and will give you a much better and more comprehensive explanation on Oct. 18,” Thoman said in a conference call. He also said the company’s sales strategy will yield “double-digit revenue growth and even better profit growth,” though he didn’t say when that will occur.