Xerox's Colour System Sales Up - Total Sales Slide

Xerox, in announcing its first quarter results, has reported that whilst revenue from colour products was up by 15 per cent, total revenue declined by one per cent.

Xerox, in announcing its first quarter results, has reported that whilst revenue from colour products was up by 15 per cent, total revenue declined by one per cent.

First-quarter equipment sales were flat year over year, and total revenue of $3.8 billion showed the one per cent decline.

Both equipment sales and total revenue included a currency benefit of two percentage points.

Xerox said that revenue growth continued to be affected by post-sale revenue declines from the company's older light-lens technology.

Weak performance in Brazil also had a negative effect on post-sale and total revenue in the first quarter, although trends are improving in that operation.

However, first-quarter earnings that reflect increased sales of its digital colour systems, growth in document services and strong operational performance.

Revenue from the company's value-added services grew 23 per cent in the first quarter as demand increased for consulting, imaging and content management from Xerox Global Services, which provides customers with systems and advice to reduce document costs and simplify work processes.

Earnings per share from continuing operations up 18 per cent compared to the first quarter of the previous year, whilst there was a $337 million operating cash flow, with a $3.3 billion cash balance.

The company reported first quarter 2005 earnings per share of 20 cents including a six cent gain from the previously announced sale of Xerox's equity interest in Integic Corp, which was offset by restructuring charges of six cents per share.

Anne M Mulcahy, Xerox's chairman and chief executive officer, said: "Our profit performance in the first quarter met the high range of our expectations through increased gross margins and operational improvements that help ensure Xerox is cost-competitive in every area of our business.

Our industry-leading colour technology and expertise in document-related consulting services continued to be the key drivers of the company's growth and despite a quarter when market conditions slowed overall equipment sales, we grew colour revenue by 15 per cent and delivered another quarter of double-digit revenue from Xerox Global Services." Xerox's production business provides commercial printers and document-intensive industries with high-speed digital technology that enables on-demand, personalised printing.

Production equipment sales grew two per cent with total production revenue down two per cent due to a decline in post-sale revenue from older light-lens products as well as declines in production publishing.

Firstquarter installations for production monochrome systems declined by nine per cent, whilst colour installations grew by 18 per cent, largely due to strong placements of the Docucolor 5252 and 8000 series as well as the iGen3 digital press.

Last month, Xerox launched a faster version of the its flagship iGen3, which is now claimed to print 10 per cent - 20 per cent faster than before at speeds up to 120 pages per minute.

Next month Xerox said it will add to its portfolio of production systems and software.

In Xerox's office business, which provides technology and services for work groups of any size, equipment sales were flat year over year and total revenue declined by two per cent.

Equipment sales revenue was affected by the company's product mix, with it selling a greater proportion of lower-priced monochrome desktop units compared to the first quarter of last year.

Installations of digital office monochrome systems were up by 17 per cent reflecting increased placements of Workcentre desktop multifunction products.

In office colour, activity was strong with installations of office colour multifunction systems up by 21 per cent and office colour printing installations up by 180 per cent.

The company commented that it had maintained its focus on costs and operational performance and, as a result, selling, administrative and general expenses decreased year over year by $27 million.

First quarter gross margins were up nearly one per cent to 40.7 per cent.

The company generated operating cash flow of $337 million in the first quarter and closed the quarter with $3.3 billion in cash.

Debt was down close to $1 billion year over year.

For the second quarter of 2005, Mulcahy said she expected earnings in the range of 21-24 cents per share.

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