Xerox Posts $1 Million Profit Amid Job Cuts; Sees 1Q Below View

Xerox Corp. (XRX) eked out a profit amid a hefty charge from its plan to cut 5% of the work force resulting from falling demand.

Shares were down 12% at $6.70 in recent premarket trading as the copy-machine and printer giant also projected first-quarter earnings of 16 cents a share to 20 cents a share. Analysts surveyed by Thomson Reuters projected 24 cents.

Meanwhile, Xerox reported net income of $1 million, down from $382 million, or 41 cents a share, a year earlier. Excluding the restructuring charge and an equipment write-off, earnings were 30 cents a share. In October, Xerox projected 34 to 36 cents, below analysts' then-expectations.

Revenue fell 11% to $4.37 billion, with nearly half the drop due to the stronger dollar. Analysts had most recently expected $4.71 billion.

Gross margin fell to 37.9% from 40.5% on increased costs.

Like most other businesses, Xerox is battling falling sales brought on by the recession. In the quarter, post-sale revenue - service, supplies and rentals - fell 8%. Equipment sales slid 15%.

Its stock is down 43% for the past year, mired at levels not seen since early this decade. But in November it ruled out a dividend cut and tapping capital markets "in the foreseeable future," crediting its "strong" financial position. Xexox added that business from repeat customers and cost cuts would help it weather the recession. The workforce reductions are aimed at saving $200 million this year in addition to boosting profit growth.

-By Mike Barris, Dow Jones Newswires; 201-938-5658; [e-mail]

Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary. You can use this link on the day this article is published and the following day.