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Xerox Reports Q4 Earnings Jan 25, 2006 |
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Xerox Corporation announced fourth-quarter 2005 earnings per share of U.S. $0.27, reflecting an 18-percent increase in net income from fourth-quarter 2004. The company also announced plans to repurchase an additional $500 million of its common stock and said it expects to deliver full-year 2006 earnings at the high end of the company's guidance.
In the fourth quarter, the company's equipment sales and total revenue of $4.3 billion were impacted by 3 points of currency, contributing to a 2-percent decline. On a constant currency basis, total revenue and equipment sales grew 1 percent. Post-sale and financing revenue, which represents about 70 percent of Xerox's total revenue, declined 2 percent and was flat in constant currency.
Xerox's production business provides commercial printers and document-intensive industries with high-speed digital technology and services that enables on-demand, personalized printing. Total production revenue declined 2 percent in the fourth quarter and grew 2 percent in constant currency. Installs of production monochrome systems increased 19 percent, reflecting the success of the Xerox 4100 light production system and growth in production publishing. Production color installs grew 58 percent driven by increased demand for the DocuColor(TM) 240/250 multifunction system and the Xerox iGen3(TM) Digital Production Press.
In Xerox's office business, which provides technology and services for workgroups of any size, revenue declined 3 percent and was flat in constant currency. Installs of digital office monochrome systems were up 20 percent largely due to increased placements of Xerox WorkCentre(TM) desktop multifunction systems. In office color, installs of multifunction systems were up 53 percent driven by the success of the recently launched office version of the DocuColor 240/250 systems. Install activity in color printers was up 27 percent.
The company also cited continued improvement in its developing markets operations with significant growth in Eurasia and Central and Eastern Europe fueling total revenue growth of 11 percent in DMO. Xerox's focus on productivity improvements resulted in lower expenses and improved gross margins. Selling, administrative and general expenses decreased $37 million year over year and were 24.6 percent of revenue in the fourth quarter. Gross margins were 41.4 percent, a year-over-year increase of about half a point.
In the fourth quarter, Xerox generated operating cash flow of $631 million. The company ended the year with $1.6 billion in cash and short-term investments while also repurchasing $433 million of its common stock during the fourth quarter. Debt was down $2.8 billion year over year and declined by about $200 million from the third quarter of 2005.
Building on the company's October 2005 announcement of a $500 million stock buyback program, Xerox now plans to use its healthy cash flow to repurchase an additional $500 million in its common stock over the next 6 months to 12 months, primarily through open-market purchases.