Xerox Up as Q1 Surpasses Expectations

Xerox(NYSE: XRX) rose US$1.85 to $8.25in Thursday morning trading, after posting a smaller-than-expected loss forthe first quarter and predicting a return to profitability in the second half of this year.

The Stamford, Connecticut-based copier maker reported a first-quarter lossof 12 cents for operational expenses, before extraordinary items. Analysts had expected a loss of 28 cents.

After factoring in items, Xerox showed earnings of 19 cents per share.

Revenue fell 8 percent from a year earlier to $4.2 billion, as “modest” growth in North American revenue was offset bydeclines in Europe and Latin America, the company said.

“Xerox’s performance in the first quarter is evidence of significant cashand operational improvements, as well as the effectiveness of our turnaroundstrategy,” chairman and chief executive officer Paul A. Allaire said.

“We are executing a successful turnaround that we expect will return Xeroxto profitability this year,” said Allaire.

Xerox said it has resolved several of the problems that hurt performancelast year. A beefed-up North American sales force “captured significantcustomer wins,” said president and chief operating officer Anne M. Mulcahy.

“Driven by revenue growth in North America and a stabilization in Europe,our first quarter results provide a solid foundation for Xerox’sturnaround,” Mulcahy said.

Having cut selling, general and administrative expenses by 5 percent andreduced inventory by more than $100 million, “we are clearly benefiting fromthe aggressive attack on our cost base and focus on operationalimprovements,” Mulcahy said.

“We are ahead of schedule in implementing ourcost-reduction plans and have taken actions that account for substantiallymore than half of our $1 billion year-end target, including the reduction of4,300 jobs worldwide in the first quarter,” she added.

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