Xerox Net Income Falls 1.5% as Sales Slip Again
Xerox Corp., the world’s biggest maker of copiers, said Monday that second-quarter net income fell about 1.5% because of fees to end credit agreements.
Net income dropped to $86 million, or 9 cents a share, from $87 million, or 11 cents, a year earlier. Sales fell for the 13th consecutive quarter to $3.92 billion from $3.95 billion, because of reduced revenue from selling ink, paper and services, the Stamford, Conn.-based company said.
Profit was reduced by expenses to renegotiate loans and replace $3.1 billion in debt with new stock, bonds and a line of credit. Equipment sales, considered an important indicator of the company’s prospects, rose 8%, mostly from currency gains. Excluding currency, equipment sales rose 1%.
Chief Executive Anne Mulcahy said Xerox would meet the top end of its 2003 profit forecast range of 50 cents to 55 cents a share.
Third-quarter profit will be 8 to 12 cents a share because of a higher tax rate and shrinking currency gains, the company said. Excluding expenses of 5 cents related to the lending changes, profit last quarter rose to 14 cents, helped by cost cuts. Analysts surveyed by Thomson First Call were expecting 12 cents.
Xerox shares rose 44 cents to $11.17 on the New York Stock Exchange. They have risen 73% in the last year.
Sales of copy machines, printers and printing presses rose about 2% in the quarter to $1.69 billion. Revenue from services for those machines such as maintenance work fell about 3% to $1.97 billion, the company said.
Xerox has shifted its emphasis from analog and black and white equipment to color and digital products, Chief Financial Officer Lawrence Zimmerman said.
During that transition revenue from paper, ink and service and other products and services sold after the bigger equipment sales are made are expected to decline, he said.
“We’ve constantly explained that the post-sale side of the equation, where we are migrating to digital, will come down for a while and there isn’t anything we can do about it,” Zimmerman said.
