Updated from 6:07 p.m. EDT
A week after warning that it would report
an unexpected loss,
cut its dividend by 75% Monday in an effort to revive its finances.
Xerox, the world's largest copier company, said that slashing its dividend to 5 cents a share, from 20 cents, would reduce its cash requirement by about $400 million a year.
``This decision helps to provide Xerox with additional financial flexibility required to implement our plans to realign our cost base and business structure to a stronger and more profitable business model," said Paul Allaire, the company's chairman and chief executive, in a statement.
Shebly Seyrafi, an analyst at
A.G. Edwards & Sons
, said the company needed to reduce its dividend as part of an effort to turn things around financially.
"When you're losing money," he added, "this will absolutely help."
Xerox's stock did not trade after hours, according to
. The company's shares had closed down 31 cents, or 2.91%, at $10.44. Plagued by financial missteps in recent quarters, Xerox's stock has fallen sharply from its 52-week high of $33.50, reached a year ago.
Citing weaker-than-expected revenue in North America and Europe, Xerox said on Oct. 2, that it would post a loss instead of the profit that analysts had expected in the third quarter. The loss would be Xerox's first in 16 years.
The Stamford, Conn.-based company said it expected a loss of 15 cents to 20 cents a share, compared with profit of 12 cents a share predicted by analysts polled by
First Call/Thomson Financial
The anticipated results are "obviously disappointing and completely unacceptable," Allaire said at the time of the warning.
Xerox said last week that it would have to alter its business plan. It said it was considering several moves, including cost reductions and asset sales, to turn around its fortunes.
The dividend cut "was to be expected," Seyrafi said. "They think they have an unsustainable business model, meaning they think they could be in the red for several quarters."
In July, Xerox
warned that its financial results for the second half of the year would be disappointing.