Xerox issues profit warning, downgrades follow

Xerox Corp. (NYSE: XRX) on Friday issued a third quarter profit warning and analysts promptly downgraded the stock.

The company said early Friday that it expects third quarter earnings per share to be down 10 to 12 percent from a year ago. The results will be well short of Wall Street estimates of 58 cents a share.

In the third quarter a year ago Xerox reported earnings of 53 cents a share on sales of $4.6 billion.

The company also said revenue would be flat with those of a year earlier due to lower-than-expected sales in Europe and the United States, particularly in September.

PaineWebber cut its rating Xerox to "neutral" from "buy." Prudential Securities cut its rating and earnings estimates on Xerox. Prudential cut its earnings estimate for 1999 to $2.42 ashare from $2.57, and cut its 2000 estimate to $2.70 from $2.85.

Xerox cited an unfavorable product mix and increased competitive pressures significantly impacted operating margins. Xerox said its results in Brazil were hurt by the continuing effects of a currency devaluation earlier this year and economic weakness, while results at its Fuji Xerox joint venture were lower than anticipated.

Xerox plans to announce third-quarter results on Oct. 18.