At first glance, Xerox
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
Yet the competition remains fierce -- Canon
Fool contributor Tom Taulli does not own shares of companies mentioned in this article.