NEW YORK (Reuters) - Xerox Corp reported a higher-than-expected quarterly profit as businesses resumed buying its printers, sending shares 1.6 percent higher and signaling a rebound in companies’ spending confidence.
Xerox, the world’s No. 1 supplier of digital printer and document management services, also raised its outlook for both this year and next year.
The company said it would cut 2,500 jobs over the next year as part of a restructuring effort that will cost $120 million more than it had previously said. The cuts will come in the manufacturing and supply chain, in back office, R&D operations and in other areas.
A spokesman added in an email that Xerox would “likely hire about the same amount” of staff over the next year to help with new contracts in its services business.
The company is still working on restructuring programs related to its $5.5 billion acquisition of Affiliated Computer Services in 2009.
Xerox, based in Norwalk, Connecticut, saw growth in its service, outsourcing, rentals, color and technology business segments.
The printer-maker is focusing on the growth of its color business, which brings in higher revenue than printing regular pages, Chief Executive Ursula Burns said on a conference call.
Burns added that the company was “competing well” against low-end printing rivals Lexmark International Inc and Hewlett-Packard Co as Xerox launches new products like the ColorQube brand of printers.
The company said there was growth of 13 percent in equipment sales and that new signings for service contracts rose 26 percent, suggesting to analysts that businesses are spending again on office equipment.
“Xerox’s products are used in everyday business, and it’s a very good sign for the economy that people are more willing to spend money to buy new office equipment,” said Cross Research analyst Shannon Cross.
Companies take three-to-five-year leases on new copiers, so investing in a new Xerox device shows confidence in their businesses, Cross added.
Net income during the third quarter nearly doubled to $256 million. On a per-share basis, the company earned 17 cents, compared with 14 cents a year earlier.
Xerox’s revenue, which rose 48 percent to $5.43 billion, missed analysts’ estimates, the third quarter is typically the company’s weakest, said Gabelli & Co analyst Hendi Susanto.
Adjusted profit of 22 cents a share edged past the analysts’ average estimate of 21 cents, according to Thomson Reuters I/B/E/S.
The company now expects full-year earnings of 92 to 93 cents a share, up from a prior forecast of 88 to 92 cents. It also raised its outlook for fiscal 2011, to a range of $1.05 to $1.10 per share from a previous $0.95 to $1.05, which is in line with analysts’ estimates of $1.07 for 2011, according to Thomson Reuters I/B/E/S .
Xerox shares were up 18 cents or 1.6 percent at $11.27 on the New York Stock Exchange on Thursday afternoon. The shares have risen about 30 percent year-to-date.
Reporting by Liana B. Baker in New York and Jennifer Robin Raj in Bangalore; Editing by Lisa Von Ahn and Matthew Lewis