Difficult Fourth Quarter for Xerox, But Surge in Entry-Level Color A4 MFP Sales

Xerox-WorkCentre-6605[1]

Xerox WorkCentre 6605

Lost a bit last week with Xerox’s announcement that it would split into two companies (see story here), was Xerox’s reporting of financial results for its fourth quarter that ended on December 31, 2015, and results for its full-year 2015.

Revenues for the fourth quarter totaled $4.7 billion, down 8 percent versus fourth-quarter 2014, with annuity revenues representing 83 percent of total revenue.

The company recorded fourth-quarter 2015 adjusted earnings per share of 32 cents. “We delivered solid performance in the fourth quarter, with earnings that were above our expectations, as a result of the progress we are making across both segments in optimizing our operating models,” noted Xerox chairman and chief executive officer Ursula Burns.

Revenue from Xerox’s Services segment, which represented 57 percent of total revenue, was $2.6 billion, down 3 percent. Revenue for Xerox’s Document Technology group (copiers, MFPs, and their related supplies) was $1.9 billion, down 13 percent, all versus fourth-quarter 2014.

Document Technology Group Results

As other vendors such as Canon have been reporting, Xerox says that its revenues were negatively affected by global economic weakness, particularly in developing markets, as well as by lower sales of supplies in the United States.  However, it points out that it remains the equipment share-leader for 24 straight quarters.

Within the Document Technology group, annuity revenue was down 13 percent and equipment revenue was down 14 percent, both year-over-year. The fourth-quarter revenue mix consisted of 17-percent entry-level units, 57-percent mid-range units, and 26 percent high-end units.

Xerox’s chart below shows encouraging results for installations of entry-level A4 MFPs for the fourth quarter (Q4) and for full-year 2015 (FY), with these installations up 63 percent and 28 percent, respectively. Not surprisingly, as customers continue to migrate from standalone printers to multifunctional units, color-printer installations fell dramatically for both periods. While not as dramatic, however, installations for higher-volume units also feel.

4th quarter and 2015 installations

Full-Year 2015 Results

Earnings per share were 49 cents for Xerox’s 2015 year, and total revenue was $18.2 billion, down 7 percent versus fiscal 2014. Full-year 2015’s revenue was made up of $10.3 billion derived from the Services group, and $7.4 billion derived from the Document Technology group. Net income was $552 million.

Full-Year 2016 Forecast

For full-year 2016, Xerox expects revenue to continue to improve modestly, and earnings per share in the range of $0.66 to $0.76 per share.

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