The adjusted earnings comfortably beat the Zacks Consensus Estimate by 5 cents.
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Before the market open, the Norwalk, CT-based company reported adjusted earnings of 30 cents per share, above analysts’ estimates of 25 cents per share. Analysts had an estimated revenue of $4.24B.
Sales overall were down four percent compared to a year ago, totaling $4.4 billion, about what analysts anticipated. “Our Services segment delivered substantial margin expansion and continued revenue growth in Document Outsourcing”. The BPO business delivered $2.5 billion in revenue, a decrease of 2 percent, while document technology operations delivered total revenue of $1.8 billion, down 7 percent. In the research note, the firm Lowers the price-target to $12.00 per share. Signings declined 9% year over year owing to lower contribution from new business. The other will be a document technology company that will retain the Xerox name. 3 of the analysts have a buy or better rating; the 0 sells versus 1 underperforms.
The separation remains on track to be completed by year-end.
Former Igate CEO Ashok Vemuri has been named the CEO of Xerox’s $7billion BPO business.
Xerox also continues with its ongoing restructuring efforts.
Xerox also reduced its projected separation costs from an earlier $200 million to $250 million down to a range of between $175 million and $200 million pre-tax, with tax-related separation costs of between $40 million and $50 million.
The company, which is splitting into two to separate businesses, its printer and business process outsourcing, took $71 million in restructuring and related charges in the second quarter, less than the $100 million it estimated in April. The company is on track to realize the roughly $700 million in annualized savings it targeted for 2016, it said. Its shares have risen 7.7% in the past month, but are still down 6.8% so far this year through Thursday’s close.
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Xerox forecast adjusted earnings of 26-28 cents per share for the third quarter, largely below the average analyst estimate of 28 cents, according to Thomson Reuters I/B/E/S. The pessimistic mood was evident in the company shares which never went considerably beyond the level of $10.04. Cash flow from operations is expected between $950 million and $1.2 billion and free cash flow within $600 to $850 million.
