Xerox Corp., the provider of printers and business services, forecast profit for this quarter that may miss analysts’ estimates as it absorbs last year’s $6 billion purchase of Affiliated Computer Services Inc.
Per-share profit this quarter, excluding some costs, will be 20 cents to 22 cents, the Norwalk, Connecticut-based company said today in a statement. Analysts estimated 22 cents on average, according to a Bloomberg survey.
Chief Executive Officer Ursula Burns is cutting costs, including about 5,000 jobs, after purchasing ACS to help boost sales from services. Revenue from Xerox’s printing equipment and related supplies climbed less than expected, said Keith Bachman, an analyst at BMO Capital Markets in New York.
“The guidance was probably a little tepid,” said Bachman, who rates the shares “market perform” and doesn’t own them. “Perhaps they’re getting a little less bullish on their core business.”
Xerox fell 60 cents, or 5.3 percent, to $10.80 in trading before U.S. exchanges opened, after gaining 17 cents to $11.40 yesterday on the New York Stock Exchange. The shares climbed 36 percent last year.
Chief Financial Officer Larry Zimmerman, 68, will step down from his post next month and be replaced by Luca Maestri, 47, finance chief at Nokia Siemens Networks, Xerox said in a separate statement. Zimmerman, who joined the company in 2002, will remain vice chairman of Xerox until April 1.
The company maintained its full-year profit forecast of $1.05 a share to $1.10 a share. Analysts estimated $1.10 on average.
Fourth-quarter net income fell to $171 million, or 12 cents a share, from $180 million, or 20 cents, a year earlier, before the ACS acquisition, the company’s biggest ever. Excluding amortization and reorganization costs, profit was 29 cents per share, compared with the 28-cent average of analyst estimates compiled by Bloomberg.
Sales advanced 42 percent to $5.98 billion, meeting analysts’ average estimate. Services revenue almost tripled to $2.7 billion, helped by ACS’s contracts, such as those for managing states’ Medicaid systems. Sales of printing equipment and other technology were little changed at $2.85 billion.
Xerox has said it may save $375 million over three years from the ACS takeover. Xerox is using ACS services, such as automating administrative tasks, to trim costs internally.
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