Xerox hit by weak global spending Xerox reported a more than 12 per cent decline in third-quarter profits and again cut its earnings outlook after the provider of printers and business services said companies and governments pulled back on spending amid global economic uncertainty. The Connecticut-based company reported a profit of $282m, or 21 cents a share, down from $320m, or 22 cents, a year earlier. Adjusting for items such as amortisation, earnings were 25 cents per share, down from 26 cents. In July, it forecast adjusted earnings of 24-26 cents per share, while analysts had forecast adjusted earnings at 27 cents. Weak European economic conditions have hampered Xerox's equipment sales in the continent as businesses have become more prudent with their spending. State and local governments in the US also tightened their pursestrings in the last quarter. Xerox lowered its earnings outlook for the year and now forecasts $1.07 to $1.09 a share in adjusted profit, down from its prior estimate of $1.07 to $1.12. The company announced a restructuring charge of $50m to $100m for the fourth quarter but excluded the amount from its earnings outlook until plans are finalised. Shares in the company fell more than 9.1 per cent to $6.39 by 11.30am in New York on Tuesday. We began the year knowing we would face certain challenges, especially as the European economies came under significant pressure . . . However, we did not predict the incremental strains on the business from more worldwide, widespread economic uncertainty, especially in the US," said Ursula Burns, chairman and chief executive officer on an earnings call. "During the third quarter we experienced a much more constrained spending environment in the US . . . due to budget constraints, less funding is available for major government projects," said Ms Burns. Alongside selling document systems, supplies, technical service and financing of products, Xerox also services student loans, processes Medicaid claims and parking tickets. Xerox has been working to transform itself into a services-focused company as digital commerce and communication continued to pose a threat to the company's traditional core business of photocopiers and printing. The company has come under acute pressure in recent years as businesses and governments have streamlined operations in order to cut costs. Revenues fell 3 per cent to $5.42bn from the same period last year, falling short of analysts" expectations of $5.49bn. Revenue from service, outsourcing and rentals increased 1 per cent to $3.73bn, while sales from its technology business dropped 12 per cent to $1.54bn. In 2009, Xerox acquired Affiliated Computer Services, which set in motion the company's push away from printing. Earlier this year the company also bought Lateral Data, a software provider to law firms, for $30m and agreed to acquire WDS, a UK-based provider of technical support and consulting to wireless telecoms companies. While Xerox has invested heavily in the shift away from its technology business it is having trouble changing the focus of its brand, which is best known for its office copiers and printers. Xerox is damned by its own name. It's unfortunate," said James Kelleher, technology analyst at Argus Research ahead of the earnings. Their brand is so iconic. But it is in the midst of a significant transformation. Their technology business will have another couple of tough quarters as hardware spending by businesses is still weak. While we might get more momentum on the services side, it's a very low-margin business. This is not looking like a blowout quarter and the company is a tough sell to investors," Mr Kelleher added.