Outlook Jams Xerox

Xerox(XRX Quote) on Friday reported third-quarter results that beat Wall Street's forecasts for revenue and profit.

The Stamford, Conn.-based copier and business-device maker's shares edged lower in early trading, however, as the company guided to the low end of analysts' expectations for the fourth quarter.

Xerox saw third-quarter total revenue grow 12% to $4.30 billion, vs. $3.84 billion in the year-ago period. The company said the increase was fueled by an 11% increase in post-sale revenue derived from servicing and supplying Xerox systems and strong sales of digital color printers, which accounted for 39% of total revenue, an increase of 3% from the third quarter of 2006.

The company reported net income of $254 million, or 27 cents a diluted share, vs. $536 million, or 54 cents a share, in the year-ago period. Third quarter results in 2006 benefited from a net 31 cents a share produced by a tax gain offset by litigation charges. Excluding those items, Xerox earned 17% more per share than last year.

Analysts polled by Thomson Financial expected earnings of 26 cents a share on revenue of $4.24 billion.

Xerox expects fourth-quarter earnings in the range of 39 cents to 41 cents per share, which is to the low end of analysts' expectation of 41 cents a share.

For the full year, however, Xerox sees earnings of between $1.18 and $1.20 a share, which at least matches analysts' prediction of $1.18 a share.

Shares were lower by 23 cents, or 1.3%, to $16.98.