Xerox today said its first-quarter profit fell as revenue declined but that sales of its lucrative digital color equipment systems improved.
First-quarter net income before payment of preferred dividends was $220 million. After those payments, Xerox's net income was $196 million, or 20 cents a share, versus $224 million, or 25 cents a share, a year earlier.
The 2004 period included a gain of eight cents a share related to an asset sale.
The results came in at the higher end of Xerox's previous forecast of 17 cents to 20 cents a share.
Analysts said the results prove that Xerox's investment in new color products, which deliver higher profit margins, is paying off, but said revenue growth continues to be elusive.
Total revenue fell 1 per cent to $3.77 billion from $3.82 billion a year earlier. The 2005 quarter included a benefit of two percentage points from the weak US dollar, which increases the value of overseas sales when they are converted into dollars.
Equipment sales were flat at $986 million, Xerox said, but revenue from its color systems grew by 15 per cent.
First quarter total gross margins rose almost 1 per cent to 40.7 per cent.
The company forecast a second-quarter profit in the range of 21 cents to 24 cents a share. Analysts had expected second-quarter profit of 23 cents a share, according to Reuters Estimates.
Shares of Xerox closed yesterdayat $13.72 on Nasdaq, down 19 per cent so far this year.