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Xerox sees another quarterly letdown

    Look for red ink from The Document Company in the third quarter.

    After market close Monday, Xerox (Nasdaq: XRX) said it sees a third quarter loss ranging between 15 and 20 cents per share. First Call's survey of 10 analysts predicted a profit of 12 cents per share for the September quarter.

    Shares of Xerox fell to 13 in afterhours activity on the Island electronic communications network, immediately following the warning. Xerox stock closed Monday's regular trading at 15.3125, up 0.3125 for the session.

    The warning marks a letdown for Paul Allaire's first full quarter as CEO and chairman, following the May resignation of Richard Thoman.

    Xerox blamed the disappointment on weak September sales in North America and Europe. Continuing slow sales of high-end products surprised the company, even as increased competition and a weak Euro hurt gross margins. Xerox also boosted its provision for bad debt and spending on customer service.

    It will take more than a sales improvement to turn Xerox around, executives said.

    "These results are obviously disappointing and completely unacceptable," said Allaire and Anne Mulcahy, president and chief operating officer. "Clearly, actions beyond resolving our operational issues are required, including major cost reductions, asset dispositions and a review of the dividend level."

    Xerox has struggled as it tries to expand beyond its core photocopier and printing business. This will be Xerox's fourth financial disappointment in five quarters. The company issued warnings for the third and fourth quarters of 1999, as well as the second quarter of this year.>