At first glance, Xerox (NYSE:XRX) appeared to have a good second quarter. The company posted earnings of $423 million, or $0.40 per share, up from $208 million, or $0.21 per share, during the previous year's Q2.

So why did Xerox get shredded yesterday? Its stock fell by 6% to $13.20.

First off, the results included a one-time benefit of $0.33 per share because of a tax settlement involving an audit for a divesture during the 1990s. There was also a restructuring charge of $0.13 per share -- more specifically, the company laid off roughly 2,600 employees.

Adjusting for those events, Xerox earned just $0.20 per share. The Street had expected the company to post earnings of $0.23 per share. What's more, the weakness is expected to continue. The company pegged its earnings at $0.16 to $0.18 per share for the third quarter, while the Street was looking for $0.22 per share.

And although the company increased quarterly revenues by 2% to $3.92 billion, a currency benefit contributed 2% to total revenue growth and equipment sales . and that means results for total revenue were essentially flat. Overall equipment sales, which grew by 4% not counting the currency benefit, didn't fare much better. It doesn't help that the company is growing its lower-priced products, which carry lower margins. In fact, a big part of the reason Xerox instituted a restructuring in its second quarter was to attempt to derive better gross margins.

Still, CEO Anne Mulcahy has conducted a tremendous turnaround, considering it wasn't so long ago that many observers feared that Xerox would go bust. Mulcahy is reducing the debt load, which fell from $10.3 billion in the year-ago period to $8.2 billion at the end of the past quarter, and she has struck key deals, such as with Motley Fool Stock Advisor pick Dell (NASDAQ:DELL), to resell printers.

Yet the competition remains fierce -- Canon (NYSE:CAJ) and Hewlett-Packard (NYSE:HPQ) being two prime examples -- and will probably erode Xerox's pricing power. It will thus take time for Xerox to reduce its costs. In other words, though there are some reasons to be hopeful, don't expect much traction from Xerox for the rest of the year.

Fool contributor Tom Taulli does not own shares of companies mentioned in this article.