Xerox Corp (XRX.N) aims to increase earnings this year by potentially more than 9 percent after it reported fourth-quarter results in line with estimates on the back of solid growth in its services business.
Once popularly known for its office copiers and printers, Xerox now only makes 45 percent of its revenue from those kinds of products, and that area is growing more slowly than Xerox's services business.
Xerox, based in Norwalk, Connecticut, said it aims to post adjusted earnings per share in a range of 21 to 24 cents in the first quarter of 2012 and between $1.12 and $1.18 per share for the full year compared with $1.08 in 2011.
By comparison, analysts are expecting earnings of $1.16 per share this year on revenue of $23.23 billion, according to Thomson Reuters I/B/E/S.
Ananda Burah at Bean, Murray Carret & Co said the outlook was a "bit softer than hoped for" but that he was "hopeful that Xerox had injected a healthy dose of conservatism into the 2012 guidance" considering economic and currency headwinds in Europe and potentially in Japan.
Xerox shares fell 1.6 percent, or 14 cents, to $8.50 in early New York Stock Exchange trading.
Xerox said that in the fourth quarter its technology unit was hit by economic weakness in Europe but that growth in its services business had compensated for the decline.
Xerox said revenue from its services business rose 6 percent, and revenue from its technology business was down 5 percent.
Signings for services -- or estimated future revenue from contracts signed during the period -- rose 15 percent in the fourth quarter.
The company said adjusted earnings per share were 33 cents, up 14 percent compared with a year earlier, in line with analysts' average estimates.
Total quarterly revenue was flat at $6 billion, just shy of analysts' estimates of $6.08 billion.
Xerox also said its board of directors had authorized an additional $500 million in share buybacks.
According to equity research firm Starmine, which gives more weight to estimates from analysts with a better track record, Xerox is traded at 7-1/2 times 12-month forward earnings.
That compares with printer-maker Lexmark LXK.N which is valued at 8.4 times and consultant Accenture (ACN.N) at 14.2 times.
(Reporting By Nicola Leske; Editing by Maureen Bavdek)