Hurt by falling sales of equipment and printer-based supplies, the company said on Friday that revenue in January and February was 18 percent below year-ago levels. It also blamed poor results from its venture with Fuji <4901.T>, which handles sales for the Xerox group in Asia.
The Xerox outlook comes on the heels of downbeat comments this week by two other household names, FedEx Corp
Earlier this month, hopes about a recovery had been lifted by optimistic comments by Bank of America Corp
With technology spending staggering, Xerox forecast first-quarter earnings of 3 cents to 5 cents per share, compared with an earlier outlook of 16 cents to 20 cents. Analysts looked for 17 cents per share, according to Reuters Estimates.
Spurred by solid profits and improved market share, the Norwalk, Connecticut-based company, whose rivals include Oce NV
However, efforts to boost revenue have been derailed by the recession. In recent months, some large clients have been hesitant about purchasing higher-end technology, analysts have said. Increased sales of lower-priced products have hurt Xerox's gross margins.
Shares of the company, down about 33 percent for the year through Thursday, dropped a further 10.6 percent to $4.77 in premarket trade.
Chief Executive Anne Mulcahy, who was an economic adviser to Barack Obama during the U.S. presidential transition, said Xerox would continue to increase market share yet cautioned in a statement that enterprise spending on technology will continue to decline this year.
As a result, Xerox said it would seek to cut some $300 million in costs, on top of the $250 million in savings it previously planned. It did not say where the additional savings would come from, but its restructuring late last year included about 3,000 job cuts.
Xerox also said it would cut total debt during the first quarter and would continue to do so throughout the year. It said it has a $2 billion line of credit and would tap credit markets only on an opportunistic basis.
Xerox is due to release first-quarter earnings on April 24.
(Reporting by Paul Thomasch; editing by Jeffrey Benkoe and Steve Orlofsky)