Xerox Reports Better-than-Expected Financial Results for 2Q2013

Xerox released its financial report on July 25th showing $5.40 billion in revenue for the 2nd quarter of 2013, up 1% compared with the same period last year. The company said its shift to a Services-led growth portfolio is paying off. Services revenue was $2.96 billion, representing 55% of Xerox’s total revenue, up 3% over 3Q2012.

However, the Document Technology business, reporting $2.26 billion revenue, saw 5% year-over-year revenue decline. Mid-Range (A3 devices) accounted for 59% of the total revenue; Entry (A4 and desktop devices) added 21%; and High-End 20%. The performance was better than Xerox’s anticipation in 1Q2013. In this segment, equipment sales saw really good pickup compared with 1Q2012. Xerox attributed the improvement to the success of its recently launched products in mid-range and high-end and the related strong backlog it had entering 2Q2013.

According to Kathryn A. Mikells – Chief Financial Officer and Executive Vice President, “Within mid-range, our recently launched ConnectKey platform has been very well received and resulted in 16% growth in installs of mid-range color MFPs. ConnectKey refers to a software system that’s embedded in 16 new multi-functional printers. It provides industry-leading security, more features for mobile users, as well as the ability to customize the MFP to link into business processes.”

“High-end also experienced strong growth, Mikells added, “in both entry and production color, driven by recently launched products. We feel good about the improving trends in this segment, as color continues to become a larger part of the business and begins to offset the declines in black and white,”

Installs in the whole entry level segment were shrinking (see table below for details) because of the weaker demand in developing markets and OEM sales. But color A4 MFPs saw good growth: up 50%.

Xerox also reported the largest installation of a fleet of Xerox iGen color presses, calling it a huge win for the graphic communications business.

According to Value Work, Shares in Xerox have risen by more than 44% since January 1, beating the gains of the wider market and demonstrating the faith that investors have in Xerox Corporation for the years ahead.