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Xerox Comments on Expected Earnings

  • Aug 01, 2000
Stamford, Conn. — Xerox Corporation announced that second quarter underlying earnings per share would be below market expectations and likely in line with the company's first quarter level. Xerox said its earnings would be further reduced by significant unexpected provisions in its Mexico business.

A likely shortfall in the sales of high-end printing and publishing products is more than offsetting expected strong revenue growth from document outsourcing, color copiers and printers, and products sold through the company's channels organization. This will result in reduced gross margins, which are expected to be further affected by a shift to sales of lower-margin products and services within each product segment.

"The disruptions in customer relationships caused by our sales force realignment, at a time when competitors have strengthened their product capabilities, is producing a drag on the second quarter sales of our most profitable products," said Paul Allaire, Xerox chairman and chief executive officer. "Our new team is focused on initiatives that will stabilize the direct sales force, stimulate sales productivity, and streamline the sales support operations so that we respond more quickly to customer needs and compress sales cycles — even though this involves some incremental costs."

Specific financial results for the quarter remain uncertain as performance in the third month of a quarter typically has the greatest effect on both revenue and earnings.

Allaire also highlighted signs that Xerox's business is progressing successfully on several fronts in the quarter, including:
  • direct sales force turnover in April and May declined significantly from first quarter and year-ago levels.
  • document outsourcing continues to grow strongly.
  • color inkjet and office color printer placements are accelerating.
  • performance continues to improve in Brazil and Fuji Xerox.
  • the company is responding to market demand by increasing manufacturing capacity for its new DocuColor 2000 family of digital presses.
Xerox also the recent release of its next-generation of Document Centre digital multifunction devices will reinforce its position in the digital document imaging marketplace. The company is also launching a new family of technologically advantaged inkjet printers for small and home offices supported by an aggressive and edgy marketing campaign.

This article originally appeared in the August 2000 issue of Recharger.

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