Xerox to boost dividend, expand share repurchase in 2013

By ANDREA DECKERT - 11/13/2012 3:38:16 PM

Xerox Corp. plans to increase its dividend next year and expand its share repurchase authorization by $1 billion, company leaders said Tuesday at its annual investor conference in New York City.

Ursula Burns, chairman and CEO, spoke on the company’s strategy to expand earnings through growth in its services business.

“Transforming Xerox to a services-led business—now accounting for more than half of our revenue—is creating a strong foundation for Xerox’s future,” Burns said in a statement. “With a clear view on the market trends in our industries, our focus is on delivering operational improvements that expand margins, increasing our base of recurring revenue and generating strong operating cash—all of which deliver long-term value for shareholders and sustainable success for Xerox.”

During the conference, the company provided expectations for 2013 financial performance, including a roughly 10 percent earnings expansion and revenue in the range of flat to up 2 percent. Full-year 2013 GAAP earnings per share are expected to be 94 cents to $1. Adjusted earnings per share are expected to be $1.09 to $1.15.

Xerox expects operating cash flow of $2.1 billion to $2.4 billion in 2013. Building on its share repurchase plan, the board of directors approved a $1 billion increase to the current authorization. Xerox expects to allocate at least $400 million in cash for share repurchase next year, adding to the $900 million to $1.1 billion in stock buyback planned for this year.

In addition, subject to approval from its board, the company will increase its dividend by 35 percent to 5.75 cents a share a quarter, beginning with the dividend payable on April 30.

As stated last month when Xerox announced its third-quarter results, the company plans to take a restructuring charge in the fourth quarter, which is estimated to be $100 million, or 5 cents a share. The restructuring is focused primarily on improving cost efficiencies in the company’s services business.

Including the restructuring charge, Xerox now expects fourth-quarter 2012 GAAP earnings per share of 24 to 26 cents or adjusted earnings per share of 28 to 30 cents.

Shares of Xerox (NYSE:XRX) were trading midday at $6.47, up 2 percent from Monday’s close of $6.33.

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