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Xerox posts lower profit
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April 22, 1998: 2:52 p.m. ET
Copier maker posts lower 1Q profit and warns of $1 billion charge
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NEW YORK (CNNfn) - Xerox Corp. reported a sharp decline in first quarter profits and warned investors it plans to take a $1 billion charge in the second quarter to pay for a previously-announced restructuring.
The Stamford, Conn.-based copier maker earned $111 million or 32 cents a diluted share in the three months ended in March, down from $270 million, or 75 cents a share the year before. Revenues rose to $4.3 billion from $4 billion.
Excluding a one-time charge of $190 million related to the company's discontinued financial services operations, Xerox posted an operating profit of $301 million, or 84 cents a diluted share - a penny ahead of Wall Street expectations.
Richard Thoman, Xerox's president and chief operating officer said that the effect of a strong dollar and "difficult" economic conditions in Asia would pose "significant challenges" for the company for the rest of the year.
Thoman added, however, that robust growth in digital products, coupled with improved productivity and the impact of a major restructuring now underway "will underpin the consistent delivery of double-digit revenue growth and mid- to high-teens earnings per share growth over the next several years."
In late afteroon trade, shares of Xerox (XRX) were off 2-3/16 to 109-5/16 Wednesday.
(Click here to see Xerox's one-year intraday stock performance.)
Gearing up for the digital age
Under the restructuring, launched April 7, Xerox will cut 9,000 jobs, or 10 percent of its worldwide work force, and take a $1 billion second-quarter charge as it gears up to shift to digital-based technology.
The overhaul will affect 150 special projects. Among other planned measures, the restructuring will result in the closure of one of the company's four U.S. customer service centers, the consolidation of other facilities and the write-down of certain assets.
On March 11, Xerox completed its long-awaited exit from insurance and financial services when it agreed to sell Crum & Forster Holdings Inc.
Xerox said revenue growth in digital products jumped to 35 percent in the first quarter and accounted for 39 percent of total revenues. In the comparable period last year, digital revenues contributed 32 percent of total revenues.
Revenues from traditional black-and-white light lens copiers, by contrast, declined 4 percent, though they still represent 46 percent of total revenues. 
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Xerox Corp.
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