Xerox Sales Plummet In Bleak Economy

The Norwalk, Conn.-based company reported net income of $1 million, or breakeven on a per-share basis, on a 10-percent drop in sales to $4.4 billion for its fourth quarter ended Dec. 31. In the year-ago quarter, Xerox posted earnings of $382 million on an 11 percent increase in sales to $4.9 billion.

"In the fourth quarter, the continued weakening economy and rapid shift in exchange rates put pressure on the business," said Xerox Chairman and CEO Anne Mulcahy in a statement.

The company said that overall sales in the quarter were hampered by a 15-percent decline in equipment sales, which fell to $1.3 billion. In addition, postsale revenues dropped 8 percent to $3.1 billion.

Xerox's fourth-quarter financials were impacted by a charge of $296 million for restructuring actions primarily for severance costs related to the layoff of 3,400 employees. Xerox said that it expects to save roughly $200 million in 2009 as a result of the reduced headcount.

Fourth-quarter revenue from color was down 6 percent, or flat in constant currency. Color pages were up 23 percent and represented 18 percent of total pages printed using Xerox technology.

The weakening economy also contributed to a 13-percent decline in total production revenue.

Xerox's production business for commercial printers and document-intensive industries also took a hit, thanks to the economic downturn, resulting in a 13-percent decline in total production revenue.

Elsewhere, Xerox said its Office group printer sales were down 9 percent to $2.40 million, partially offset by an expansion into the SMB market. Equipment sales for the Office group were down 13 percent, while postsales revenue was down 7 percent.

For the full fiscal year, Xerox earned $230 million, or 26 cents per share, on revenue of $17.61 billion, compared with 2007 profit of $1.14 billion, or $1.19 per share, on sales of $17.23 billion.

In reporting third-quarter financials in October, the company announced a restructuring plan that includes a restructuring charge of 27 cents per share, as well as an equipment write-off of 3 cents per share.

Xerox said it expects first-quarter 2009 earnings in the range of 16 cents to 20 cents per share.

"We remain confident that the value we bring to our customers can help them through this economy," Mulcahy said. "Much of what we do is aimed squarely at helping our customers reduce costs and operate more efficiently and effectively. Our services business continues to grow, and we're prioritizing investments to build on this momentum in 2009. Discussions with customers about saving up to 30 percent on their document costs get attention. It's a powerful value proposition in any economy."