Earnings Preview: Xerox

Xerox Corp. (XRX) is expected to report Q1 earnings before the market open on Friday, April 24 with a conference call scheduled for 10:00 am ET.

Guidance

The consensus estimate is 4c for EPS and $3.54B for revenue, according to First Call. On March 20 Xerox sharply cut its Q1 earnings forecast to between 3c and 5c, compared to the previous guidance of 16c to 20c. The company blamed it on “the increasingly more challenging global economic environment.” Xerox said the reduction included a 6c impact arising from costs of restructuring the Fuji Xerox joint venture, “with the balance resulting from an industry wide slowdown in technology spending.” The company said its revenue in January and February was down 18%, including a five point hit from currency, “largely due to lower sales of equipment and printer-based supplies.” Xerox also expects enterprise spending on technology to continue its downward trend in 2009. Xerox further stated that it's on course to save $250M this year from previous restructuring initiatives and has identified a further $300M in expense reductions. The company is also reducing debt in the current quarter and plans to access credit markets "only on an opportunistic basis."

Analyst Views

On March 23 Citigroup reiterated their Buy rating despite the lowered Q1 guidance as they believe the quarter represents a bottom for EPS and cash flow, and sees no material liquidity risk.

Comments

[Michael J:]

Any guidance on what changed from the first estimates to March 20, aside from the "economy blablabla"?

Apr 24 09:26 AM