Xerox cuts 2015 profit forecast due to strong dollar

Xerox Square is seen in Rochester, New York in this undated handout photo.

/Xerox/Handout

- Xerox Corp cut its 2015 profit forecast, blaming a strong dollar, and reported quarterly revenue below Wall Street's expectations, hurt mainly by lower printer sales and higher costs. The company, which got a third of its revenue from outside the United States last year, also said it expects 2015 revenue to fall 1 percent on a constant currency basis, compared with its previous forecast of revenue being flat with a year earlier.Xerox's shares fell as much as 14 percent in early trading on Friday.The 110-year old company's printer and copier business has been on the downswing for some time now, as companies cut down on printing and personal computing moves to smartphones and tablets.Revenue from the unit fell for the fourteenth straight quarter, slipping more than 10 percent in the first quarter ended March 31. (1.usa.gov/1aXFzwP)As its printing business falters, the company has in recent years been focusing on its services business such as business process outsourcing and document outsourcing.However, services revenue too fell 2.7 percent in the latest quarter. The business contributes about 56 percent to total revenue.The company's expenses in its services business are also rising, which, Xerox said, would mean that margins in the business would be 8.5-9.0 percent in 2015, lower than its prior expectation of 9-10 percent.Despite the rise in costs, Xerox expects 2015 revenue from the services business to be at the low end of its forecast of 2-4 percent growth, Chief Financial Officer Kathryn Mikells said on a post-earnings call.Xerox lowered its 2015 adjusted profit forecast to 95 cents-$1.01 per share from $1.00-$1.06. Analysts were expecting a profit of $1.02 per share, according to Thomson I/B/E/S.Total revenue fell 6.3 percent to $4.47 billion in the first quarter, missing analysts' average estimate of $4.56 billion.Net income attributable to Xerox fell to 20 percent to $225 million. On an adjusted basis, the company earned 21 cents per share, in line with analysts' average expectation.Xerox shares were down 10.5 percent at $11.75 in midday trading on the New York Stock Exchange. They hit a 52-week low of $11.322 earlier in the session. (Reporting by Sai Sachin R in Bengaluru; Editing by Simon Jennings and Savio D'Souza)