Xerox last night warned of a bigger third-quarter loss than expected, citing poor sales and unusual costs after the September 11th attacks, but the copier and printer giant said it remained cautiously optimistic that operating profits would return in the current quarter. Xerox, best known for its office photocopiers, said it expected a loss of 22-25 US cents a share, before restructuring charges of five US cents a share, in the third quarter.

Revenues are projected at $3.8-$4 billion (€4.2-€4.4 billion). Wall Street analysts, on average, had forecast a loss of 12 US cents a share on revenues of $3.94 billion, according to Thomson Financial/First Call. Xerox, which implemented a turnaround plan this year to sell assets and cut billions of dollars in costs, has for months fostered confidence among investors with its statement in June that profits were likely to return by the fourth quarter.

But Wall Street analysts, while commending the plan, said Xerox might find it hard to meet its targets amid a weak economy and tough competition.