AP News, January 24th, 2008
Office equipment maker Xerox Corp. on Thursday said its profit rose 79 percent in the fourth quarter on a mix of cost controls and growth in equipment financing and services.
Xerox also said its board approved an additional $1 billion for its stock buyback plan, on top of the $370 million remaining under the existing plan.
Its shares climbed $1.08, or 8.2 percent, to $14.33 Thursday.
The company posted net income of $382 million, or 41 cents per share, compared to a year-earlier profit of $214 million, or 22 cents per share. Revenue rose to $4.88 billion from $4.38 billion a year earlier.
Analysts polled by Thomson Financial on average expected earnings of 41 cents per share on revenue of $4.83 billion.
Net income in 2007 was $1.14 billion, or $1.19 a share, down from $1.21 billion, or $1.22 a share, in 2006, and matching analysts' expectations of $1.19 a share, according to Thomson Financial.
For the year, Xerox reported revenue of $17.2 billion, up by more than 8 percent from $15.9 billion the previous year, but slightly above Wall Street expectations of $17.17 billion, according to analysts polled by Thomson Financial.
For the first quarter, Xerox forecast earnings per share of 25 cents to 28 cents. Analysts expected earnings per share of 28 cents.
Anne Mulcahy, chief executive, told investors in a conference call that the number of pages printed on Xerox color systems — a key measurement of business because it provides post-sale revenue from color ink and supplies — was up 30 percent last year over 2006.
"We are miles ahead of our competitors on color pages and most importantly, pages remain the best source of our double-digit color annuity growth," she said.
Xerox added more than $1 billion to its annuity stream last year, she said.
"So we remain quite confident that our annuity-based business model is working," Mulcahy said.
Asked about the slowing economy, Mulcahy said she sees "some mixed signals," but the Norwalk-based office equipment manufacturer is shielded by diversity of its business, she said.
Having more than 70 percent of revenues in annuity "gives us the opportunity to weather volatility in equipment sales much more than other companies," Mulcahy said.
Jeff Embersits, chief investment officer at Shareholder Value Management in Belmont, Calif., said the quarterly results were "pretty solid," but he's worried about the possible impact of an economic slowdown on the printer and copier industry.
"I'm not real comfortable with the industry right now," he said. "I'm not jumping in as a buy with both feet."
However, Xerox was strengthened by its purchase last year of Tampa, Fla.-based Global Imaging, which gives it a better presence among mid-market businesses, Embersits said.
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On the Net: http://www.xerox.com
