XEROX CORP. $8.72 - New York symbol XRX

XEROX CORP. $8.72 (New York symbol XRX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 869.1 million; Market cap: $7.6 billion; Price-to-sales ratio: 0.5; WSSF Rating: Average) makes copiers, laser printers and other high-end publishing equipment. The company spends about 5% of its revenue on research. Over the past few years, this has let it develop new colour printers that have helped its customers cut their paper use. It has also produced other innovations, such as its proprietary solid-ink technology, which is less expensive on a per-page basis than traditional ink cartridges. The recession weighed on Xerox’s revenue and earnings in the latest quarter. In the three months ended June 30, 2009, Xerox earned $140 million, or $0.16 a share. That’s 34.9% less than the $215 million, or $0.24 a share, it earned a year earlier. Revenue fell 17.7%, to $3.7 billion from $4.5 billion. In response, Xerox has cut 4% of its workforce since the start of 2009. This should lower its costs by $300 million this year. The savings should also help it pay down its $6.7-billion long-term debt, which is a high 88% of its market cap. It holds cash of $1.2 billion, or $1.40 a share. Xerox gets roughly 55% of its revenue by selling replenishable printing supplies and performing maintenance. That cuts the company’s reliance on equipment sales, which tend to be more cyclical. The company will probably earn $0.54 a share this year, and the stock trades at 16.1 times that figure. The $0.17 dividend yields 1.9%. However, it needs a sustained economic recovery to spur its growth. Xerox is a hold.