Xerox’s net income leaps 62 pct on ACS acquisition, but revenue falls slightly short of Street

Xerox’s earns soar following ACS buyout

SAN FRANCISCO — Xerox reported Thursday that second-quarter net income jumped 62 percent and revenue 48 percent as the company reaped the benefits of its $6 billion acquisition of outsourcer Affiliated Computer Services.

The deal was completed in February, so ACS’s numbers were only included in this year’s results.

Xerox also raised its guidance. It now expects net income of 88 cents to 92 cents per share, versus the earlier forecast for 75 cents to 85 cents per share.

Xerox’s profit beat Wall Street’s forecasts and shares rose quickly in premarket trading, even though revenue fell just short of expectations.

Xerox sells printers and supplies and document-management services, and more than 80 percent of its revenue comes from long-term contracts with predictable, annuity-type payments.

One potential concern is the fact Xerox saw a drop in demand for its technical services, which include equipment maintenance. That is a sign businesses are holding back on some types of spending.

Xerox blames “a continued but moderating decline” in the number of pages being printed. Revenue in Xerox’s biggest category — which includes services, outsourcing and equipment rentals — rose 82 percent but would have fallen 1 percent if ACS’s results had been included in last year’s results.

Sales of new equipment were strong, however, rising 12 percent to $930 million. That should eventually translate to more pages being printed, but Xerox noted that change doesn’t happen immediately.

Xerox’s net income was $227 million, or 16 cents per share, versus $140 million, or also 16 cents per share, in the year-ago period. The number of Xerox shares for the quarter ended June 30 was significantly higher than last year because the ACS deal included cash and stock.

Excluding items, Xerox Corp. would have earned 24 cents per share. That beats analysts’ expectations of 21 cents per share.

Revenue was $5.51 billion, up from $3.73 billion, but slightly less than most analysts expected.

Before the market opened, Xerox shares rose 5 percent, or 44 cents, to $8.85 in electronic trading.