NEW YORK – Xerox Corp. (XRX) on Friday said second-quarter profit more than doubled on stronger sales of copiers and printers and on cost cutting, and it raised its full-year outlook on strong demand for its new technology.
Analysts applauded the company's cost cuts and improved sales of digital copiers and printers, but expressed concerns about the decline in its revenue.
Stamford, Conn.-based Xerox, whose shares rose more than 2 percent, said net income available to common shareholders rose 149 percent to $187 million, or 21 cents a share, from $75 million, or 9 cents per share, a year earlier.
Wall Street analysts on average had expected 17 cents a share, according to Reuters Estimates.
The stock was up "mainly because they upped their guidance for 2004," said Ulysses Yannas, analyst with Buckman, Buckman & Reid Inc. "Their improvement in profit was very significant for the six months as well as for the quarter."
Xerox raised its 2004 earnings outlook to a range of 80 cents to 84 cents a share from its earlier view of 67 cents to 72 cents.
The company said it was on track to meet its 2005 profit target of 90 cents to $1 a share. Analysts, on average, expect earnings of 91 cents a share for 2005, according to Reuters Estimates.
The company's higher profit resulted from sales of high-end and high-margin equipment and cost cutting that lowered its expenses by 6 percent for the quarter.
Second-quarter revenue declined 2 percent to $3.85 billion from $3.92 billion. The average Reuters estimate was $3.96 billion, with a low end of $3.87 billion.
The company said it had a significant decline in sales of toners, paper and inks in Latin America.
"It's a problem that will not go away fast but it seems they have a good handle over it," said Yannas.
He said Latin America was a very important market for Xerox five years ago but it's less important now.
"Other than the revenue lightness, the company seems to be on track," said Shannon Cross, analyst with Cross Research. "They had issues in Latin America but they seem to be addressing it."
Shares of Xerox were up 30 cents, or 2.25 percent, at $13.61 on the New York Stock Exchange.
Xerox is moving from the older light-lens technology for copiers to digital technology. The company no longer makes light-lens copiers, but some of its revenues come from supplies and maintenance of old machines.
For the quarter, light-lens represented 7 percent of total revenue. Digital and high-volume production machines now represent more than two-third of revenue, while 25 percent is from color products.
The company launched four new products in the quarter.
Sales of equipment rose 5 percent but revenue from services, outsourcing and rentals declined 6 percent to $1.86 billion and finance income fell 8 percent to $234 million.