Xerox Earnings Beat Street Estimates As Color, SMB Grow

The Stamford, Conn.-based company reported $4.2 billion in revenue and net income of $266 million, compared with $4.1 billion and $260 million for the year-ago quarter. Xerox earnings of 28 cents per share beat the average of Wall Street expectations of 27 cents, as reported by Thompson Financial. Xerox met analysts' expectations for revenue.

Xerox also said it was boosting its own expectations for full-year earnings to between $1.16 and $1.18 per share, and said it expected its third-quarter earnings to be between 24 cents and 26 cents per share. The average of Wall Street analyst expectations is for Xerox to turn in $1.18 per share for the year and 26 cents for the third quarter.

Xerox Chairman and CEO Anne Mulcahy, in a statement, also cited the acquisition earlier this year of its Global Imaging subsidiary as a key part of its strategy.

"With the Global Imaging team now on board, we've increased our reach to U.S. small and mid-size businesses by 50 percent," Mulcahy said. "At the same time, our investment in delivering the industry's broadest portfolio of color technology is paying off with the annuity from our color business increasing 16 percent."

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Xerox said revenue from the sale of color products and solutions now makes up 38 percent of its overall revenue.

Xerox reported its second-quarter earnings during a week when Wall Street has been increasingly skittish about corporate profits. Last week, Google disappointed investors with its quarterly earnings report and yesterday Lexmark reported that it was still under pressure. Xerox executives were expected to spell out the details of their quarterly performance in a later conference call with financial analysts.

Like Lexmark on Tuesday, Xerox reported increasing price pressure on its hardware products. The company said its equipment sales during the quarter dropped three percent even factoring in a two-percent boost from currency exchange rates. Xerox says it is seeing a very quick boost from its newer products, and reported that more than two-thirds of the company's equipment sales revenue is from products it only introduced within the past two years.