Xerox Corporation (NYSE: XRX), a provider of portfolio of business process and information technology outsourcing support, document technology and solutions, today reported a decline in its first-quarter profit and weaker margins. However, the company’s first-quarter profit came in-line with Street estimates. The company also raised its forecast for the current quarter, sending shares higher.
Norwalk, Connecticut-based Xerox reported first-quarter net income of $276 million, or $0.19 per share for the first quarter, compared with net income of $289 million, or $0.19 per share reported for the same period in the previous year. Excluding one-time items, XRX reported earnings of $0.23 per share, in-line with analysts’ estimate.
Xerox’s revenue for the first quarter of 2012 rose 1% to $5.5 billion. Analysts surveyed by Thomson Reuters were expecting the company to report revenue of $5.45 billion. The year-over-year increase in revenue was driven by 10% rise in XRX’s services group. This was partially offset by a 5% decline in the company’s technology unit.
Ursula Burns, CEO of Xerox, said that the company’s first-quarter results reflect the successful execution of its strategy to accelerate services and grow its install base of color products. Burns further said that services now represents over half of XRX’s total revenue and will continue to be the growth engine as the company expands its BPO offerings and strengthen its leadership in managed print services.
Burns noted that as XRX’s business mix continues to undergo changes, the company expects short-term pressure on margins that will eventually be offset through cost reductions and operational efficiencies.
Xerox also raised its forecast for the second quarter. The company now expects second-quarter earnings to come in between $0.25 per share and $0.28 per share. Analysts expect Xerox to report second-quarter earnings of $0.26 per share.
XRX also reiterated its fiscal 2012 earnings guidance of $1.12-$1.18 per share. Analysts expect the company to report earnings of $1.13 per share in fiscal 2012.
Xerox’s guidance for the current quarter had lifted the company’s shares earlier today. However, the stock has pared its early gains and is now marginally higher. At last check, XRX shares were trading 0.13% higher at $7.88 on above average volume of 20.14 million. The stock touched an intra-day high of $8.15.
Xerox shares are down 0.94% so far this year, compared with a gain of 8.71% for the S&P 500 in the same period.
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