Xerox Q3 Earnings Rise 2 Percent But Announces Job Cut

October 23, 2008 10:25 p.m. EST

San Francisco, CA (AHN) - Xerox Corp announced Thursday third quarter earnings rose 2 percent, matching estimates. However, the company plans to cut 5 percent of its workforce as part of a cost cutting initiative.

The copy machine company posted third quarter earnings of $258 million or 29 cents a share, compared to $254 million or 27 cents a share in the same period a year earlier. Revenue rose to $4.4 billion, up 2 percent from last year.

Earnings were ahead a penny better than analyst estimates, according to Thomson Reuters, while revenue fell just shy of the $4.47 billion analysts anticipated.

Equipment sales fell 3 percent to $1.13 billion but revenue from ink and other supplies for their machines rose 3 percent to $3.25 billion.

Gross margin fell in the third quarter to 39.2 percent from 40.2 percent last year.

Xerox said it will cut 5 percent of its workforce, roughly 3,000 jobs as it prepares for the economic slowdown. The company has already slashed 1,500 jobs this year.

Xerox also said the job cuts and other cost cutting actions will lead to a $400 million restructuring charge in the fourth quarter.

"We're assuming more of the same ... deterioration in the economic markets," said CEO Anne Mulcahy on a conference call, according to the Associated Press "That's why we're being so aggressive in terms of the cost reductions, so we can be assured of delivering the earnings growth that we expect in 2009."

Shares of Xerox fell 3.4 percent on Thursday to $7.71 a share.