Xerox Profits Jump on Strong Product Sales

Xerox Corp. (XRX) reported Thursday that third-quarter profits increased 39 percent, citing strong sales of new products and demand for document services.

The Stamford-based maker of copiers and printers said it earned $163 million, or 17 cents per share, for the July-September period, compared with $117 million, or 11 cents per share, for the same period a year ago.

The results beat the consensus estimate of 14 cents per share of analysts surveyed by Thomson First Call.

"Xerox's innovative technology and service offerings — delivered through an expanding distribution system with a lean and flexible business model — continue to solidify our market leadership, driving consistently strong earnings performance," said Anne M. Mulcahy (search), Xerox chairman and chief executive officer.

But revenue was down slightly and the company's fourth quarter forecast was below expectations. Xerox shares traded Friday on the New York Stock Exchange (search) at $14.26, down 28 cents or nearly 2 percent.

Revenue in the third quarter was $3.72 billion, down slightly from $3.73 billion a year ago.

Mulcahy said she expects earnings of 20 to 22 cents per share in the fourth quarter and full-year profits of 83 to 85 cents per share. Analysts were expecting profits of 24 cents per share in the fourth quarter and 84 cents per share for the year.

Xerox returned to profitability in the past few years after implementing a turnaround plan that included substantial cost cutting and new products. The company had faced management problems, growing competition, a falling stock price and an accounting scandal.

About two-thirds of all equipment sales in the third quarter came from products launched in the past two years, Mulcahy said. Revenue from color products, a key part of the company's growth strategy, grew 18 percent in the third quarter, Xerox said.

The company announced 35 new products this year.

"It's a growth strategy that is working," Mulcahy said in a conference call with analysts. "Our technology investments continue to fuel growth."

For the first nine months of the year, Xerox reported net income of $619 million, or 63 cents per share, on revenue of $11.4 billion. For the same period last year, Xerox had profits of $138 million, or 11 cents per share, on revenue of $11.4 billion.