Xerox Corp. (NYSE: XRX) said Friday second quarter earnings per share would be below market expectations and likely in line with the company's first quarter earnings, which were 30 cents a share. First Call's consensus of 13 analysts was expecting the company to pull in 42 cents a share.
Xerox also said its earnings would be further reduced by significant unexpected provisions in its Mexico business.
Things just keep getting worse for the world's largest copier maker. The stock, which has fallen steeply over the year, took another downward turn May 12 after President and Chief Executive G. Richard Thoman resigned. His attempts to turn around the met with repeated profit disappointments and continuing stock declines. Shares closed at 25 5/16 Thursday, and were down 15 percent before Friday's opening bell.
Xerox said a shortfall in the sales of high-end printing and publishing products is canceling out strong revenue growth from document outsourcing, color copiers, and products sold through its channels organization. As a result, it will report reduced gross margins. Margins are expected to be further affected by a shift to sales of lower-margin products and services within each product segment.
In December Xerox had reorganized several businesses in an effort to stem sales declines. ``The disruptions in customer relationships caused by our sales force realignment, at a time when competitors have strengthened their product capabilities, is producing a drag on the second quarter sales of our most profitable products,'' said chairman and CEO Paul Allaire in a press release.
Allaire said though he is "confident of improvements during the second half of the year," that "they will be developing later and to a lesser degree than previously anticipated." He doesn't expect momentum to accelerate until 2001.
The company will focus on productivity initiatives and improving cash flow in an effort to improve execution.
Xerox's top competitors include Canon (Nasdaq: CANNY) and Hewlett-Packard (NYSE: HWP), according to Hoover's Online.
The company will announce second quarter earnings on July 26.