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Xerox posts 4Q profit
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January 28, 2002: 10:37 a.m. ET
Copier maker benefits from gain on currency transactions, sales down.
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NEW YORK (CNN/Money) - Xerox Corp. posted a double-digit fourth-quarter profit, blowing past with Wall Street expectations for a loss as the office equipment maker benefited from a one-time gain from favorable currency transactions.
For the quarter ended Dec. 31, Xerox posted a profit excluding restructuring charges of 15 cents a share, compared with a loss of 25 cents a share a year earlier. Analysts on average anticipated a loss of a penny a share, according to earnings tracker First Call.
The results include a one-time gain of 6 cents a share from favorable overseas currency transactions, the company said.
Including charges, Stamford, Conn.-based Xerox (XRX: up $0.66 to $10.56, Research, Estimates) posted a loss of a penny a share, compared with a loss of 4 cents a share a year earlier.
Fourth-quarter revenue tumbled 13 percent to $4.3 billion from $4.9 billion.
Xerox has been trying to restore profitability over the past few years after it found itself behind the technology curve, remaining focused on its core copy machine business as competitors moved on to computer and digital printing equipment.
The company has pared down through such moves as exiting the home office products business and spinning off its famed Palo Alto Research Center into an independent company.
Xerox also obtained more than $1 billion in financing in November through a convertible securities offering that helped improve its cash flow position. The company said Monday its cash flow had increased to $4.5 billion.
Net debt declined 25 percent, or $4.1 billion, from a year earlier.
"With the clear objective of creating a leaner, faster, and more flexible enterprise, we made the difficult but necessary decisions this past year to exit certain businesses, outsource some internal functions and dramatically reduce our cost base," CEO Anne Mulcahy said in a statement.
Mulcahy added that the company remains comfortable with first-quarter estimates for a loss of 2 cents a share, according to First Call, and that it is confident of restoring profitability in the current fiscal year.
Analysts currently expect Xerox to post a profit of 27 cents a share for 2002, compared with the net loss of 43 cents a share it reported for 2001.
Xerox said gross margins in the quarter increased 3.2 percentage points as it cut costs by 25 percent from a year earlier. The company decreased inventory by $600 million, or 30 percent, for the year.
The company lowered costs in the quarter by cutting 4,400 jobs and outsourcing office manufacturing operations. By the end of 2001, Xerox had reduced its total headcount by 13,600 to 78,900. 
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