Xerox Reports Loss, Warns on Future Earnings

STAMFORD, Conn. – Office equipment company Xerox Corp. on Wednesday reported a second-quarter net loss of $281 million, including many restructuring charges, and warned that it may not return to profitability until the fourth quarter as a result of the weak economy.

Including net restructuring charges, gains from the early retirement of debt and a 28 cents-a-share charge associated with its panned exit from the small office/home office printer and copier business, the loss was 40 cents per share.

Xerox, known for its copiers and printers, said its loss before the one-time items was 68 million, or 10 cents a share, compared with a year-earlier profit of $201 million, or 27 cents per share.

Analysts' estimates of the loss had ranged from 8 cents to 12 cents a share, with an average of 10 cents, according to research firm Thomson Financial/First Call.

Second-quarter revenue fell 13 percent to $4.14 billion from $4.78 billion a year earlier.

Xerox has lost ground in recent years from tough competition and its own operational blunders, and this year it has struggled to put behind it concerns about accounting practices and charges of discrimination by some employees.

With a goal of turning a profit for the full year, the company has reorganized its operations, cut staff and trimmed spending, including suspending its quarterly dividend for the first time in 53 years.

On Wednesday, President and Chief Operating Officer Anne Mulcahy said customers are delaying purchasing decisions because of the weakened economy.

``We continue to expect a return to profitability in the second half of 2001,'' she said, ``but the economic environment and normal third-quarter seasonality will likely delay this to the fourth quarter.''

Mulcahy said Xerox is ahead of schedule in meeting its target of cutting $1 billion in costs, having achieved some 75 percent of the goal, including the reduction of 8,600 jobs worldwide since September.

Xerox shares closed at $7.99, off 21 cents, on Tuesday. Since June 14, when the company announced its plans to exit the low-end consumer printer and copier market, the stock has fallen about 3 percent, but still outperformed the Standard and Poor's 500 index, which has fallen 4 percent.