Xerox withdraws annual revenue forecast after posting loss due to virus

Xerox reported results for the first time after it announced calling off its efforts to take over HP due to the economic uncertainties caused by the pandemic.

Xerox withdraws 2020 guidance
Xerox withdraws 2020 guidance (REUTERS)

Xerox Holdings Corp., which last month dropped a hostile takeover bid for larger rival HP Inc., withdrew its annual revenue forecast, signaling uncertainty over how high a toll the economic slowdown from the Covid-19 pandemic will take on the copy-machine maker.

Revenue reached $1.9 billion over the first quarter, a 14% drop from a year earlier, the Norwalk, Connecticut-based company said Tuesday in a statement. Pretax losses came in at $5 million.

Xerox said in January it expected to generate adjusted profit of as much as $3.70 a share on revenue of $8.63 billion in fiscal 2020.

Xerox is reporting results for the first time since calling off its effort to acquire HP because of the economic uncertainty caused by the virus. Now Chief Executive Officer John Visentin must shepherd the pioneer in photocopying technology through the downturn in the face of falling demand for printed documents and eight years of declining sales. Businesses, preserving cash to weather a possible recession, are also postponing information technology projects, representing a threat to Xerox.

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Xerox's shares remained flat in early trading after closing Monday at $17.82 in New York. The stock has plunged 52% this year.

The hardware company warned that, because of the lock down measures countries are implementing, the hit on its business could persist. Xerox expects the greatest impact to its revenues from business closures to be during the second quarter, with revenue returning to expected levels nearer the end of the year.

Xerox generated $325 million in equipment sales of hardware in the first quarter, a decrease of 27% from a year earlier. The company recognized $1.5 billion in post-sale revenue during the period, which includes ink supplies, maintenance and other managed services.