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Xerox Corp. stock dropped Tuesday following the company’s release of its third-quarter financial results.
The company reported year-over-year decreases in profit and sales driven, in part, by continued economic challenges in the United States and Europe.
Xerox shares (NYSE: XRX) were trading mid-afternoon at $6.50, down nearly 8 percent from Monday’s close of $7.03.
The earnings matched Street expectations, but revenues were lower than expected.
Net income attributable to Xerox was $282 million, or 21 cents a diluted share, down from a profit of $320 million, or 22 cents a diluted share, a year ago. Excluding special charges, Xerox reported adjusted earnings per share of 25 cents, down from 26 cents a year ago.
Revenue was $5.4 billion, down 3 percent from $5.6 billion a year ago.
Analysts polled by Thomson Reuters expected Xerox to report earnings per share of 25 cents on revenues of $5.5 billion.
“Our third-quarter performance aligns with shifts in our business as services become a larger proportion of our revenue, and reflects the dynamics of a challenging economy that is creating cost pressures for large enterprises and governments,” said Ursula Burns, chairman and CEO, in a statement.
Revenue from the company’s services business was up 6 percent in constant currency, partially offsetting a 7 percent constant currency decline in technology revenue, which represents the sale of document systems, supplies, technical service and financing of products.
The company generated $594 million in cash from operations and is on track to deliver full-year operating cash flow of $2 billion to $2.3 billion as well as repurchase $900 million to $1.1 billion in Xerox stock during the year, the company said.
During the quarter, Xerox recorded net restructuring and asset impairment charges of $14 million, which included roughly $17 million of severance costs related to headcount reductions of some 870 employees primarily in North America. The costs partially were offset by $3 million of net reversals for changes in estimated reserves from prior period initiatives, Xerox said.
In the fourth quarter, Xerox plans to take a restructuring charge of $50 million to $100 million. Until the plans are finalized, the company’s earnings per share guidance excludes this charge.
Xerox expects fourth-quarter earnings of 29 cents to 31 cents per share. Fourth-quarter adjusted earnings per share are expected to be 33 cents to 35 cents. As a result, full-year 2012 earnings per share are expected to be 92 cents to 94 cents and full-year adjusted earnings per share $1.07 to $1.09.
Xerox ranked first on the most recent Rochester Business Journal list of manufacturers with 6,100 local workers.
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