Xerox Posts Higher-Than-Expected Profit

Xerox Corp. said its profit rose more than expected in the latest period, helped by falling expenses as the company plows ahead with its planned separation.

The Norwalk, Conn., company has been working to separate the business by the end of the year into two companies: the slower-growing document business, which will keep the Xerox name, and the services business, to be called Conduent Inc. On Friday, Xerox said the separation is on track to wrap up this year.

Both units at the company have been struggling to grow. In the June quarter, revenue in the company's services business declined 2%, or 1% on a constant-currency basis, to $2.47 billion. Sales in its legacy hardware division dropped 7%, or 6% on constant-currency, to $1.75 billion.

Xerox logged $28 million in separation costs compared with none a year before but restructuring-related costs fell 55%, helping push overall costs down 6% to $4.24 billion.

Late last month, the company agreed to let activist investor Carl Icahn place a director on the board immediately, who would continue on the board of the spun-off documents business. Mr. Icahn—Xerox's largest shareholder, with a roughly 9.8% stake in the company, according to FactSet—already has been promised three seats at the business-services company when that is spun out.

Over all, Xerox earned $155 million, or 15 cents a share, compared with $12 million, or a penny a share, a year before. Excluding items, the company earned 30 cents a share, above its guidance range for per-share profit between 24 and 26 cents.

Revenue fell 4% to $4.39 billion, in line with the analyst estimate on Thomson Reuters.

The company backed its full-year adjusted earnings view of $1.10 to $1.20 a share; analysts expect $1.09 a share. In the current quarter, Xerox expects adjusted per-share earnings between 26 and 28 cents a share. Analysts projected of 28 cents.

The company said it now expects to incur one-time separation costs of $175 million to $200 million pretax, lower than its previous estimate of $200 million to $250 million.

Xerox stock has risen 7.7% in the past month but is still down 6.8% so far this year. Shares were inactive premarket.

Write to Joshua Jamerson at [e-mail]

(END) Dow Jones Newswires

July 29, 2016 08:15 ET (12:15 GMT)

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