Xerox

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turned a better-than-expected profit in its third quarter on a 6% revenue decline as overall margins jumped by more than 4 percentage points.

The copier maker said it earned $105 million, or 5 cents a share after preferred dividends and an ESOP contribution, compared with a loss of $32 million, or 5 cents a share, last year. The latest quarter's results also included a restructuring charge of 6 cents a share. Revenue fell to $3.8 billion in the latest quarter from $4.1 billion a year ago.

Analysts polled by First Call were expecting earnings of 2 cents a share.

Xerox said its gross margin was 42% in the latest quarter, while its selling, general and administrative expenses fell 13%. The company said it produced $611 million of operating cash flow in the period and ended the quarter with $2.3 billion in cash.

The company said about half of the revenue decline is attributable to an exited business line and from "declines in its developing markets operations." The company said it saw "quarter-by-quarter percentage improvements" in its core office and production business.

Xerox's shares were gaining 4.5% to $7 in the Instinet premarket session.