Xerox revenue impacted by strong dollar, tight budgets

Tue Oct 23, 2012 7:34am EDT

(Reuters) - Xerox Corp (XRX.N) reported a drop in quarterly revenue as growth in the company's services business could not entirely offset the impact of a strong dollar, weak economic conditions in Europe and tight government budgets.

Xerox, best known for its office copiers and printers, said on Tuesday that third-quarter earnings per share were 25 cents, in line with average analyst expectations.

Revenue fell 3 percent to $5.4 billion, below Wall Street estimates of $5.51 billion.

"While we're pleased with the continued revenue growth trajectory in services, the profitability of a few contracts has been hampered by constraints in government spending, delaying implementation on committed projects that required our upfront investments," Chief Executive Ursula Burns said in a statement.

Xerox has moved into business services with its purchase of Affiliated Computer Services Inc for $5.5 billion in 2009 - the company's biggest deal in its 106-year history.

It now derives more than half of its revenue from its services unit, but investments in the business have pressured margins.

Its technology business includes document systems, supplies, technical services and financing of products.

(Reporting by Sruthi Ramakrishnan in Bangalore, Nicola Leske in New York; Editing by Sriraj Kalluvila and Maureen Bavdek)