Xerox Corp. (XRX) Shares Lower on Disappointing Earnings
Shares of the Xerox Corporation (XRX) were trading down -0.67 or -6.00 percent to $10.50 per share in Monday’s premarket after the company announced lower than expected earnings early this morning. Xerox Corp. stock closed at $11.17 per share, up +0.01 or +0.09 percent in Friday’s regular trading session.
Founded in 1906 Norwalk Connecticut based Xerox Corp. started up as “The Haloid Photographic Company” in Rochester, New York, a manufacturer of photographic equipment and paper.
In the 1970s, the company invented several devices at its Palo Alto, California research facility that would later become standard elements of personal computing: the computer mouse, the desktop metaphor Graphic User Interface or GUI and desktop computing. The developments were not appreciated by management at the time, which ordered Xerox engineers to share the features with technicians from Apple (AAPL) Computer. The features were also subsequently adopted by Microsoft (MSFT), becoming standard equipment in all personal computers. On January 29th, the company announced it would be splitting into two separate publicly traded companies and expects to file its initial Form 10 registration statement with the SEC in July.
For the company’s first fiscal quarter of 2016, Xerox reported it had earned $34 million or $0.03 per share versus $225 million or $0.19 in the same quarter last year. After adjustments for one-time gains and expenses, the company earned $0.22 per share.
Revenue for the quarter came to $4.28 billion, versus $4.47 billion in 2015’s first quarter, which was down -4 percent or -3 percent on a constant currency basis. The analyst consensus was for the company to report earnings of $0.23 per share on revenue of $4.24 billion.
Xerox Chairman and Chief Executive Officer Ursula Burns stated in the company’s press release that, “We delivered adjusted EPS in line with our guidance, revenue growth in both the Document Outsourcing and BPO businesses of our Services segment, and a strong renewal rate in Services. Document Technology revenue declines remained in line with last quarter and continue to be pressured by weak developing markets economies. We have accelerated our cost reduction efforts across the company and expect to begin realizing the benefits in the second quarter”.
For the second quarter, Xerox expects GAAP earnings per share of $0.06 to $0.08 per share and on an adjusted basis, a profit of $0.24 to $0.26 per share. The company affirmed its full year guidance of $1.10 to $1.20 per share.
Xerox earnings were affected by its restructuring costs and its plan to separate into two separate companies. The company is also implementing a three-year strategic transformation program, which is expected to realize $700 million in annualized savings this year.
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