Update: Xerox Gets Slammed After Earnings Warning

Updated from 3:14 p.m. EDT

Shares of Xerox (XRX) tumbled as much as 19% on Wednesday, after warning that it is unlikely to meet its numbers for the second half of the year.

Xerox finished Wednesday regular trading down 3 1/4, or 18%, at 14 15/16.

The Stamford, Conn.-based company also reported profits that were slashed in half, though Xerox met expectations that had been lowered after the document processing company warned last month of an earnings shortfall and disclosed that federal securities regulators are investigating its Mexico business.

Currently, the consensus estimate for the third quarter stands at 38 cents a share and for the full year at $1.56, according to First Call/Thomson Financial.

For the second quarter ended June 30, income before special items fell to $222 million, or 30 cents a diluted share, from $448 million, or 62 cents a share, a year earlier, meeting the consensus estimate of analysts polled by First Call/Thomson Financial.

Xerox took a charge of 11 cents a share for problems with customer receivables in Mexico.

Revenue fell to $4.69 billion from $4.86 billion a year ago.

On June 16, Xerox warned that its earnings would be well below Wall Street's expectations, attributing the shortfall to slack demand for the company's high-end printing and publishing products and higher-than-anticipated costs to run its Mexico business.

The investigation by the Securities and Exchange Commission was announced by the company on June 29.

Including special items, including the charge for the Mexican subsidiary, the company reported net income of $145 million, or 19 cents a share.

Besieged by strong competition in its highest-margin product lines, problems collecting on accounts in Mexico and upheaval in its sales force, the company ousted its chief executive last month after a failed reorganization.

>To order reprints of this article, click here: Reprints