Xerox Stock Falls on Disappointing Results

Xerox Corp. stunned Wall Street on Friday by reporting its third-quarter profit got jammed on slack sales of black-and-white copiers. The news sent the company’s stock plunging nearly 15%.

The nation’s largest copier company blamed unexpectedly slow sales in overseas markets, particularly in Brazil and Europe, despite an unusually steep investment to sell the copiers.

Xerox earned $250 million, or 71 cents a share, in the three months ended Sept. 30, compared with $236 million, or 68 cents, a year ago when it had a $20-million write-off for its insurance unit.

Without the write-off a year ago, Xerox’s profit would have dropped 2% during the most recent quarter.

The results contrasted with expectations by analysts for an 82-cents a share profit, according to a survey by First Call Inc.

Stock of Stamford, Conn.-based Xerox plunged more than 20% at its low point Friday, then recovered a bit to end down $8.25 at $48.75.

“I am disappointed in the results this quarter,” said Xerox Chairman Paul A. Allaire.

“Our investments in sales coverage and promotion did not yield the results we expected in the quarter.”

Black-and-white copier revenue, which makes up more than half the company’s sales, fell 4% amid competitive pressures to cut prices and tough economies that hurt sales in Europe and Brazil.

Compounding the slow revenue gains, the company spent 8% more on research and development and 10% more on selling the copiers amid higher spending for advertising and marketing.

Xerox hopes to improve its outlook by refocusing its main business to so-called digital copiers.

In the first nine months of the year, the company earned $780 million, or $2.24 a share. A year earlier, the company earned $621 million, or $1.78 a share, on revenue of $11.8 billion.

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The more than $100 million McDonald’s spent to introduce the Arch Deluxe cheeseburger hasn’t stopped a slide in its U.S. restaurant business.

The company reported Friday that its third-quarter profit rose 10%, but U.S. operations performed sluggishly for the sixth consecutive quarter.

The Oak Brook, Ill.-based company said earnings for the three months ended Sept. 30 rose to a record $440.6 million, or 62 cents a share, from $400.1 million, or 56 cents, a year ago.

The results were in-line with analysts’ expectations.

At a Glance:

Comsat reported net income of $5 million, or 10 cents a share for the third quarter, compared with profit from operations of $6.6 million, or 14 cents, in the year-ago period. The Bethesda, Md.-based firm also said it plans to shed the biggest drain on its earnings, its 80% stake in Ascent Entertainment Group. Ascent’s anticipated operating results and its recent $225-million acquisition of Spectravision’s in-hotel video business will probably result in a loss in the fourth quarter for Comsat.

Edison International reported third-quarter earnings of $276.8 million, or 63 cents a share, compared with $287.6 million, or 65 cents, in the year-ago quarter.

Zenith reported a third-quarter loss of $40.2 million, or 61 cents a share, contrasted with a profit of $1.8 million, or 4 cents, a year earlier.

ITT reported flat earnings in the third quarter of $67 million, or 57 cents a share. A year earlier, not counting the businesses that have been spun off, the company’s $67-million profit worked out to 56 cents a share.