Total revenue of $3.6 billion was down 18 percent including a 6 point negative currency impact. The decline is largely due to the downstream impact of the economy with constraints in the overall business environment delaying purchasing decisions and the company’s distributors holding lower inventory levels. Post-sale and financing revenue was down 14 percent or 8 percent in constant currency. Equipment sale revenue declined 30 percent or 26 percent in constant currency.
“During the first quarter, we saw an accelerated rate of decline in enterprise spending on technology, especially in Europe and developing markets,” said Anne Mulcahy, Xerox chairman and chief executive officer. “Our roadmap in this recession is focused on cost and expense management, cash generation and continuing to strengthen our number-one revenue share position through innovation and services. We’re making progress in all three of these areas and expect the flow-through from our actions to mitigate further economic challenges.
“During the year, we will continue to bring new technology to market that provides more affordable choices for our customers and launch more document services that help our customers cut their document costs by up to 30 percent,” added Mulcahy. “As disciplined as we are in cost management, we’re equally determined to invest in growth, ensuring that Xerox is in an advantaged position as the economy improves.”
Xerox decreased its total debt by $485 million in the first quarter and plans to reduce overall debt by more than $1 billion this year. First-quarter operating cash flow of $22 million is in line with last year. In addition, the company expects fullyear operating cash flow of $1.3 billion.
The company reiterated that it will deliver $250 million in savings throughout this year from previous restructuring actions, as well as an additional $300 million in
non-restructuring cost and expense reductions that will flow through to earnings and cash generation.
First-quarter selling, administrative and general (SAG) expenses were down year over year by $120 million and SAG as a percent of revenue was 28.2 percent. Gross margin was 38.9 percent in the first quarter, down about half a point from the prior year.
Xerox expects second-quarter 2009 earnings in the range of 10 cents to 12 cents per share, delivering full-year 2009 earnings of 50 cents to 55 cents per share.