The reduction includes a 6 cent impact from Xerox’s share of Fuji Xerox’s restructuring and a lower than expected Fuji Xerox profit contribution with the balance resulting from an industry-wide slowdown in technology spending, putting pressure on revenue and earnings. Xerox’s total revenue in January and February declined 18 percent including a 5 point currency impact, largely due to lower sales of equipment and printer-based supplies.
While Xerox remains the prominent player in our industry with number-one revenue share, we expect that enterprise spending on technology will continue to decline this year," said Anne Mulcahy, Xerox chairman and chief executive officer. "Through our expanded distribution, we’re confident we’ll continue to grow market share even in this challenging environment. At the same time, we’re expediting further cost savings that help to offset the economic impact on revenue while fueling our operating cash flow."
The company said it is on track to deliver $250 million in savings throughout this year from previous restructuring actions, and has identified an additional $300 million in cost and expense reductions that will flow through to earnings and cash generation.
Xerox is decreasing its total debt during the first quarter and plans continued debt reduction during the year. With access to a $2 billion line of credit, the company also said it would access the credit markets only on an opportunistic basis.
"All our decisions are aligned with ensuring we have the financial flexibility to navigate well through these turbulent times while positioning the company for growth when the economy improves, building on our industry leadership in document technology and services," said Mulcahy.
Xerox is scheduled to announce first-quarter earnings on April 24, at which time it will update its guidance for full-year 2009.