Xerox profit misses estimates, sets job cuts

The world's top supplier of digital printer and document management services plans to take a $400 million charge in the fourth quarter due to the accelerated cost cutting plans, which affects about 3,000 jobs worldwide.

XEROX (XRX.NY)also issued a fourth quarter forecast that fell short of Wall Street estimates, sending the Norwalk, Connecticut, company's shares down 4 percent in pre-open trade.

The weak U.S. economy has spurred some clients to become hesitant to purchase higher-end technology. As a result, the company has marked increased sales of lower-priced products, hurting gross margins.

"To better align our operations with these changes, we're accelerating actions to reduce our cost base and drive operational improvements across the board," Xerox chief executive Anne Mulcahy in a statement.

Third quarter net income was $258 million, or 29 cents a share, versus $254 million, or 27 cents a share one year ago. Its gross margins declined to 39.2 percent from 40.1 percent.

Excluding special items, such as the settlement of certain tax benefits and a restructuring charge, the profit was 26 cents a share, according to Reuters Estimates.

Analysts had expected a profit of 28 cents a share, according to Reuters Estimates.

Total revenue rose 2 percent to $4.4 billion, but was essentially unchanged after the benefit of the weak dollar.

Xerox, which earns about 70 percent of its revenue from supplies and services sold to repeat customers, said so-called post-sales revenue rose 3 percent, while equipment sales declined 3 percent in the third quarter.

It expects fourth quarter earnings in the range of 34 cents to 36 cents per share, compared to Wall Street view of 43 cents a share, according to Reuters Estimates.

Shares of the company, which competes with Canon Inc <7751.T> of Japan and Heidelberg of Germany, are down about 51 percent this year. They traded 32 cents lower to $7.66 in premarket trading.

(Reporting by Franklin Paul; Editing by Derek Caney)