Xerox steps up restructuring, second-quarter EPS goal below Street

(Reuters) - Xerox Corp on Tuesday forecast second-quarter earnings below estimates as it accelerates its restructuring efforts to become a broader technology company.

In an attempt to counter sluggish growth in its technology business, which includes printers and copiers, Xerox has been transforming itself into a business services provider, offering services such as managing toll systems and healthcare programs.

Based in Norwalk, Connecticut, Xerox moved into business services with its purchase of Affiliated Computer Services Inc (ACS) for $5.5 billion in 2009 - the company's biggest deal in its 106-year history.

Xerox said it plans to quicken the pace of a restructuring plan kicked off in the last quarter of 2012 in its services business and included a 2-cent restructuring charge in its second-quarter outlook.

For the second quarter, Xerox forecast earnings, excluding items, of 23 cents to 25 cents per share. Wall Street was looking for 26 cents per share, according to Thomson Reuters I/B/E/S.

The company had forecast the same EPS range for the first three months of the year but reported higher adjusted earnings of 27 cents per share due to a benefit of 2 cents after reducing its reserve for recent litigation.

It beat the average analyst estimate of 24 cents.

"The key driver in the litigation reserve benefit is a positive ruling by a judge on our securities litigation dating back to early 2000s," a spokesman said.

Revenue in the first quarter fell 3 percent to $5.4 billion, below analyst expectations of $5.5 billion.

"Challenges in our document technology business continued during the first quarter," Chief Executive Ursula Burns said.

Revenue from the company's document technology business was down 9 percent while revenue from the company's services business rose 4 percent.

"We don't think it's going to be great reporting season for any of our companies. With that said, we view this report as disappointing - with bookings being very good, but services revenues and margins being disappointing," Keith Bachman, an analyst with BMO capital markets, said.

Xerox said it was on track to reach its full-year target of 2013 adjusted EPS of $1.09 to $1.15 and to generate operating cash flow of $2.1 billion to $2.4 billion.

(Reporting by Nicola Leske; Editing by Jeffrey Benkoe and Maureen Bavdek)

Source: http://news.yahoo.com/xerox-first-quarter-profit-beats-street-view-111104245--sector.html

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