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EDITIONS
Wednesday, 23 October, 2002, 17:31 GMT 18:31 UK
Xerox confident on year ahead
Xerox headquarter
Xerox expects to meet full year profit targets
Xerox, the office equipment giant, returned to positive earnings in the three months to September, thanks to cost cutting and the launch of new products.

However, its shares fell 5% on suggestions that it might need to raise funds to pay back some of its large debt over the next three years.

Xerox, the world's largest photocopier company, said it was now confident of "strong full year profitability", although it did not give specific figures.

Earlier this year, the group was fined $10m for overstating its accounts and falsely boosting its revenue figures.

Reversal of fortune

For the three months to September, Xerox reported earnings of $105m, or five cents per share.

This was above expectations and reversed a loss of five cents per share in the same period last year.


It tells you they have a capital crunch....You don't want to go out and raise money at these prices.

Hugh Johnson, First Albany Corp.

Chief executive Anne Mulcahy said Xerox, which has been struggling against increased competition and heavy losses, was "winning consumers' confidence".

Ms Mulcahy did not give specific financial targets for the October to December period but said: "Continued business model enhancement, including additional restructuring actions, will strengthen our bottom line."

Copying cuts

Xerox's "restructuring" has already involved the loss of 1,600 jobs in the three months to September as part of its cost-cutting plans.

However, the firm has debts of about $9bn (5.8bn) due over the next three years.

Chief financial officer Lawrence Zimmerman said on Wednesday that the company had no immediate plans to raise funds.

But he said it had made a provisional filing with the SEC for up to $3bn in debt and equity sometime in the future.

The news reversed an earlier rise in Xerox's shares, sending them down by as much as 5%.

Hugh Johnson, chief investment officer at First Albany Corporation, said:

"It tells you they have a capital crunch....You don't want to go out and raise money at these prices."

Losing streak

In April, the Securities and Exchange Commission (SEC) found Xerox guilty of what it called "accounting tricks" to make earnings look $1.5bn higher than they actually were.

The company was fined $10m and made to restate its accounts from 1997 to 2001.

Despite telling investors on Wednesday that it now has some $2.3bn in cash, the market remained wary.

By 1700 GMT, its shares were down over 3% or 24 cents to $6.44.

See also:

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