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Xerox Profit Increases 41% on Cost Cutting, Services Revenue

July 22 (Bloomberg) -- Xerox Corp., the provider of printers and business services, reported a 41 percent increase in second-quarter profit after reducing costs and boosting revenue from services.

Net income rose to $319 million, or 22 cents a share, from $227 million, or 16 cents, a year earlier, Norwalk, Connecticut-based Xerox said today in a statement. Profit, excluding some costs, rose to 27 cents a share. Analysts had estimated 24 cents on average, according to a Bloomberg survey.

Chief Executive Officer Ursula Burns has said the earthquake that struck Japan in March, which hurt the company’s suppliers, will affect Xerox in the second and third quarters. Burns is also trying to cut costs after last year’s $6 billion purchase of Affiliated Computer Services Inc., Xerox’s largest ever.

“We continue to believe Xerox is best positioned within the copier industry following the Japanese earthquake,” said Shannon Cross, an analyst at Cross Research who rates the stock “buy” and doesn’t own it. “Recent discussions we have had with Fuji Xerox point to strength in Xerox’s end markets.”

The company may save more than $375 million in three years as a result of the ACS takeover, Xerox has said.

Revenue climbed 1.9 percent to $5.61 billion, compared with the average analyst estimate of $5.64 billion.

Xerox said it plans to resume its stock buyback program this quarter and purchase about $700 million in stock through the second half of the year. Chief Financial Officer Luca Maestri said in May at an investor briefing that Xerox will spend at least 70 percent of its available cash this year on share buybacks, starting in the third quarter.

Xerox fell 22 cents, or 2.1 percent, to $10.08 at 4 p.m. in New York Stock Exchange trading. The stock has dropped 13 percent this year.

To contact the reporter on this story: Devin Banerjee in New York at dbanerjee2@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net.

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