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Xerox hits expectations for Q4 earnings

Rochester Business Journal
January 24, 2014

Shares of Xerox Corp. stock were down roughly 1 percent Friday after the company reported fourth-quarter earnings that were in line with expectations.

Shares of Xerox (NYSE: XRX) were trading midday at $11.64, down from Thursday’s close of $11.76.

The company reported before markets opened Friday that net income attributable to Xerox of $306 million, down 9 percent from net income of $335 million a year ago. Xerox posted earnings per share of 25 cents, compared with 26 cents a year ago. Adjusted earnings per share were 29 cents.

Revenue was $5.6 billion, down 3 percent from sales of $5.8 billion.

Analysts polled by Thomson Reuters expected Xerox to report earnings per share of 29 cents on sales of some $5.6 billion.

“We managed anticipated headwinds while continuing to build our business by investing in growth markets such as health care and graphic communications, and expanding services internationally,” said Ursula Burns, Xerox chairman and CEO, in a statement. “Looking ahead, we’re focused on evolving our portfolio and implementing our cost initiatives to improve both revenue and margins.”

Revenue from the company’s services business, which represented 55 percent of total revenue, was $3 billion, flat year over year and down 1 percent in constant currency.

Revenue from the company’s document technology business, which represented 42 percent of total revenue, was $2.4 billion, down 6 percent.

Xerox generated some $1 billion in cash flow from operations during the fourth quarter and $2.4 billion for the year. It ended 2013 with a cash balance of $1.8 billion. The company repurchased $524 million of shares in the fourth quarter and some $700 million for the year.

During the quarter, Xerox recorded net restructuring and asset impairment charges of $56 million, which included roughly $64 million of severance costs related to headcount reductions of some 1,600 employees worldwide and $2 million of lease cancellations.

Xerox ranked first on the most recent Rochester Business Journal list of manufacturers. At the end of 2013, the company reported 6,385 local workers, down from 6,423 when the list published in August.

Worldwide employment of 143,100 at year-end decreased by some 4,500 from December 31, 2012, due to restructuring-related actions and normal attrition outpacing hiring and a slower pace of acquisitions, the company said.

The costs were offset partially by $10 million of net reversals for changes in estimated reserves from prior period initiatives, the company said.

Xerox’s board of directors increased the company’s quarterly cash dividend by 8.7 percent to 6.25 cents a share, beginning with the dividend payable on April 30.

For the first quarter, Xerox expects earnings of 19 to 21 cents a share and adjusted earnings per share of 23 to 25 cents. The company reiterated its full-year 2014 guidance of earnings per share of 93 to 99 cents, and adjusted earnings per share of $1.10 to $1.16.

For the year, Xerox reported net income attributable to Xerox of $1.16 billion, or 93 cents a share, versus net income of $1.2 billion, or 87 cents a share, in 2012. Adjusted earnings per share for 2013 were $1.09.

Annual sales were $21.4 billion, down 1 percent from $21.7 billion in 2012.

Analysts expected Xerox to report earnings per share of $1.09 on sales of nearly $21.5 billion.
(c) 2014 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail

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