Yet another technology company is seeing lower financial results. Xerox Corp. — which announced its
exit from the small office/home office business market in June
— has announced a third-quarter loss of 24 cents per share, excluding restructuring charges of 5 cents per share. Third-quarter revenue was $3.9 billion, 13 percent lower than the third quarter of last year.
However, the company says its liquidity position continues to improve. The company had US$2.4 billion in cash as of Sept. 30 compared to $2.2 billion at the end of June.
Xerox’s net debt is down $3.4 billion since the end of September 2000, a 20 percent reduction. The company said that it has recently initiated discussions with its agent banks to refinance a portion of its $7 billion revolving line of credit and extend its maturity from October 2002.
While revenue in North America and Europe declined, both regions showed significant year-over-year bottom-line improvement led by increased profitability in North America, Anne M. Mulcahy, Xerox president and chief executive officer, said in a prepared statement. Revenue in the company’s developing markets was down 34 percent, reflecting weakened economies and reduced equipment placements in Latin America as the company reconfigures these operations to maximize liquidity versus gaining market share, she added. Gross margins increased from the third quarter of last year to 36.2 percent, and represent the first year-over-year margin improvement since Xerox launched its turnaround program in the fourth quarter of 2000.
Last October, Xerox announced plans to reduce $1 billion in costs by the close of 2001. Today the company reported that it has implemented actions that will achieve the entire $1 billion target, including the reduction of close to 11,000 positions worldwide through the combination of early retirement, voluntary leave programs, attrition and layoffs.
In looking forward to the fourth quarter, Mulcahy said the company remained “cautiously optimistic that the benefits from our turnaround program will position the company for a return to operational profitability.” However, the uncertainty in the marketplace presents significant challenges and will lessen the sequential increase in fourth-quarter revenue, she added.
When the company exited the SOHO market, Mulcahy had said that the exit would hopefully enable Xerox to save money and return to profitability before year’s end. This, of course, doesn’t seem likely. Mulcahy added that Xerox’s data showed that inkjet sales are dropping and continuing to slow down. Xerox’s SOHO products included the USB-based multipurpose WorkCenter peripherals and DocuPrint series of inkjet printers.