(Updates share price in sixth paragraph.)
Oct. 25 (Bloomberg) -- Xerox Corp., the provider of printers and business services, reported third-quarter profit climbed 28 percent on increasing spending by customers.
Net income rose to $320 million, or 22 cents a share, from $250 million, or 17 cents, a year earlier, Norwalk, Connecticut- based Xerox said today in a statement. Earnings, excluding some costs, rose to 26 cents a share. Analysts projected 25 cents, the average of estimates compiled by Bloomberg.
Xerox is benefiting from its shift in focus to enterprise services after last year’s acquisition of Affiliated Computer Services Inc., the company’s largest ever. The company has said it plans to save more than $375 million in three years as a result of the takeover, helping to boost profit and cut debt.
Because of ACS, Xerox is “well suited to the current global economic environment,” Jim Kelleher, an analyst at Argus Research in New York, said in a note to investors. “The heavy investment phase in hardware is likely winding down, and companies are now looking for the expertise to help them maximize investments.”
The company narrowed its earnings forecast for the year to $1.08 to $1.11 a share from a previous range of $1.07 to $1.12. Analysts predicted $1.08. It forecast fourth-quarter earnings of 32 cents to 35 cents a share, compared with the 32-cent average analyst estimate.
Xerox rose 0.3 percent to $8.02 at the close in New York. It has dropped 30 percent this year.
Revenue climbed 2.9 percent to $5.58 billion, compared with the average analyst estimate of $5.59 billion. Business process outsourcing, services and rentals, the main driver of Xerox’s revenue, advanced to $3.69 billion from $3.57 billion.
The Japan earthquake, which hurt suppliers this year, is no longer affecting the company’s performance, Chief Executive Officer Ursula Burns said in the statement.
“Supply constraints due to the natural disaster in Japan have eased considerably,” Burns said. “As we continue to meet new demand, all while reducing our backlog, we’re confident these challenges are entirely behind us.”
The company repurchased $309 million of its shares in the third quarter, and plans to spend about $400 million on buybacks this quarter.
--Editors: Ville Heiskanen, James Callan
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