Xerox cuts guidance, ups buyback forecast

Citing "increased implementation costs in government healthcare," Xerox (XRX -0.9%) expects Q2 EPS of $0.25-$0.27, below a $0.28 consensus. Full-year EPS guidance is now at $1.07-$.1.13, down from a prior $1.10-$1.16 and largely below a $1.13 consensus.

Xerox has been seen as an Obamacare beneficiary: The company has landed a slew of IT services contracts from state governments to help implement the Affordable Care Act.

Xerox is raising its 2014 buyback forecast from at least $500M to at least $700M. $275M was spent on buybacks in Q1.

Services revenue (57% of total) was flat Y/Y in Q1, same as in Q4. Document Technology sales (40% of total, includes printers/copiers and software) fell 4% vs. 6% in Q4. Financing revenue fell 15% vs. 18%.

Gross margin fell 30 bps Y/Y to 30.2%. R&D fell to 2.8% of revenue from 3%, and SG&A to 18.8% of revenue from 20.0%. Op. margin rose 110 bps to 8.6%.

Q1 results, PR

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