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Xerox Beats Estimates

But guidance is a little light.

Xerox (XRX) - Get Xerox Holdings Corporation (XRX) Report hit third-quarter targets but guided below the Wall Street consensus for the fourth quarter.

The Stamford, Conn., digital imaging company made $536 million, or 54 cents a share, for the quarter ended Sept. 30, up from the year-ago $63 million, or 5 cents a share. On an adjusted basis, excluding certain items, latest-quarter earnings were 23 cents a share, a penny better than the Thomson Financial analyst consensus estimate.

Revenue rose to $3.84 billion from $3.76 billion a year earlier, beating the $3.82 billion Thomson target.

"The leading indicators of our growth strategy -- which is all about boosting our annuity stream through growth in digital, services and color -- continued to trend positively in the third quarter," said CEO Anne Mulcahy. "Install activity was up for Xerox digital systems in key markets like office multifunction and production color. Our expertise in document management flowed through to post-sale growth of 7% from global services. And, our broad portfolio of color technology fueled a 16% increase in post-sale revenue from color."

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Gross margins were 40.2% in the third quarter, a year-over-year decline of 1.1 points. The decline was primarily due to product mix and equipment pricing as well as lower margins in Xerox's global services business as the company incurred upfront costs to support new multi-year managed services contracts. Selling, administrative and general expenses were 25.6% of revenue, a year-over-year improvement of 1.3 points.

The company expects to make 34 to 37 cents a share for the fourth quarter on an adjusted basis, against a 37-cent Thomson estimate.