Xerox focuses on services as printer business declines
By Nicola Leske and Sayantani Ghosh
(Reuters) - Printer and copier maker Xerox Corp forecast current-quarter earnings below estimates as it accelerates efforts to transform itself into a technology services provider.
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. Continued...