Xerox waves job axe at 3,000 staff

As Q3 results disappoint Wall Street

By Kelly Fiveash • Get more from this author

Posted in Financial News, 24th October 2008 11:33 GMT

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Printing giant Xerox Corp looks set to cull its worldwide workforce by five per cent.

Xerox will axe about 3,000 jobs over the next six months to save $200m. Yesterday the company lowered its forecast for the next quarter amid what CEO Anne Mulcahy described as a “tough business environment”.

The firm disappointed Wall Street yesterday with its third quarter results. It pulled in net income of $258m, or 29 cents per share.

However, excluding special items, profit was 26 cents per share, according to Reuters. Analysts were looking for the firm to reel in 28 cents per share.

Demand for high-end printing systems has been sluggish and gross margins have dropped to 39.2 per cent from 40.1 per cent, the company said. It will take a $400m pre-tax “restructuring charge” in Q4 to trim its headcount by about 3,000.

Xerox, which currently employs more than 57,000 workers worldwide, said those plans were “still in the process of being finalised by management in order to accelerate our cost-reduction activities on a global basis”.

Revenue was flat in Q3. It climbed a measly two per cent to $4.4bn, but suffered from the US economy’s downturn and the weaker dollar.

Equipment sales fell three per cent in the quarter as biz customers were reluctant to shell out for new Xerox gear, or simply hunted out bargains elsewhere.

The company has seen shares tumble in value by more than 50 per cent in the past year. Xerox said it now expects Q4 earnings in the range of 34 cents to 36 cents per share. Wall Street had predicted 43 cents a share for the quarter.

Xerox shares are currently down 36 cents to $7.62 on the New York Stock Exchange. ®

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