* First-quarter revenue $5.36 bln vs estimate $5.50 bln
* Expects 2nd-qtr adj earnings $0.23-$0.25/share vs est
* Expects 2nd-qtr document tech rev to fall in mid-single
* Sees weak Europe, weak but stable US
By Nicola Leske and Sayantani Ghosh
April 23 Printer and copier maker Xerox Corp
forecast current-quarter earnings below estimates as it
accelerates efforts to transform itself into a technology
Xerox, whose shares were little changed at midday, also
offers services such as managing toll systems and healthcare
programs to counter sluggish growth in its printers and copiers
business, which accounts for about 40 percent of its revenue.
Services is now the larger part of the company's business
and lower margins in IT and business process outsourcing is
dragging overall margins.
The company said it expects second-quarter revenue from its
document technology business, which includes printers and
copiers, to decline in the mid-single digits. Revenue fell 9
percent to $2.14 billion in the business in the first quarter.
Based in Norwalk, Connecticut, Xerox moved into business
services with its purchase of Affiliated Computer Services Inc
(ACS) for $5.5 billion in 2009 - the company's biggest deal in
its 106-year history.
Xerox said it plans to quicken the pace of a restructuring
plan kicked off in the last quarter of 2012 and included a
2-cent restructuring charge in its second-quarter forecast.
Xerox said it expects flattish revenue for the full year,
compared with previous expectations of up to a 2 percent growth,
it said on a conference call with analysts.
The company said it was on track to reach its target of
adjusted EPS of $1.09 to $1.15 for the full year and to generate
operating cash flow of $2.1 billion to $2.4 billion.
"Europe remains weak. US remains stable, but weak. We have
not seen a pickup in the US," Xerox CEO Ursula Burns said on a
conference call with analysts.
"We did see a slowdown, a bit of a slowdown, in some
developing market economies. But our business model is fairly
resilient in the developing markets," she said.
Smaller rival Lexmark International Inc's
first-quarter revenue beat expectations and the company forecast
second-quarter revenue largely above estimates, sending its
shares up 12 percent.
For the second quarter, Xerox forecast earnings, excluding
items, of 23 cents to 25 cents per share. Analysts on average
were expecting 26 cents per share, according to Thomson Reuters
The company had forecast the same EPS range for the first
quarter but reported higher adjusted earnings of 27 cents per
share due to a benefit of 2 cents after reducing its reserve for
recent litigation. It beat analyst estimate of 24 cents.
"The key driver in the litigation reserve benefit is a
positive ruling by a judge on our securities litigation dating
back to early 2000s," a spokesman said.
Revenue in the first quarter fell 3 percent to $5.36
billion, below analyst expectations of $5.5 billion. Revenue
from the company's services business rose 4 percent.