Old Industrials Profit From New Products

Article Excerpt

In the past few years, these four industrial companies have invested heavily in research to transform their traditional products (telephones, copiers and cash registers) to take advantage of new digital technologies. While this spending has cut into their earnings, it has helped them expand sales to their current customers, and enter new markets. We have a high opinion of all four, particularly since their products and services help cut their customers’ costs. But only three are buys right now. XEROX CORP. $15 (New York symbol XRX; Conservative Growth Portfolio, Manufacturing & Industry sector; WSSF Rating: Average) is one of the world’s leading makers of printers, copiers and document publishing equipment. Overseas markets account for about half of its sales and profits. In the three months ended June 30, 2006, Xerox’s earnings fell 35.0%, to $0.26 a share (total $260 million) from $0.40 a share ($423 million) a year earlier. However, the year-earlier quarter included a non-recurring net gain of $213 million. Sales rose…

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