What happened

Shares of Xerox Holdings (XRX -1.28%) tumbled on Tuesday, following the document management and printing equipment veteran's disappointing third-quarter report. Share prices dipped 25.8% lower at 9:45 a.m. ET before recovering to a 17.5% loss by 1:20 p.m. ET.

So what

Xerox's third-quarter sales landed at $1.75 billion, a rounding error below the year-ago result. Adjusted earnings declined by 60%, stopping at $0.19 per diluted share. The average Wall Street analyst had expected earnings closer to $0.43 per share on top-line revenues in the neighborhood of $1.77 billion.

Furthermore, management lowered its full-year revenue guidance by approximately $50 million. The bottom end of Xerox's free cash flow target for the same period dropped from $400 million to $125 million.

Now what

In the second quarter's guidance update, Xerox had expected its choked-up supply chain to catch a breath in the third quarter, but that positive development never materialized. The company also faced significant currency exchange challenges, since 35% of revenues are collected abroad. Inflation also weighed heavily on Xerox's top and bottom lines.

CEO Steve Bandrowczak acknowledged the macroeconomic challenges facing his business, but he also reiterated his view that the addressable market should grow in the next few years. Xerox is leaning on its decades of print and document management experience here.

Xerox shares are trading at new multiyear lows after today's price drop. Bulls would point out that the stock is changing hands at just 7.6 times forward earnings and 0.4 times trailing sales, and that the dividend yield now stands at a generous 7.6%.

However, Xerox is also wrestling more than its fair share of business challenges, so I'm not reaching for the buy button today. The company has work to do if it wants to win the trust of both customers and investors.