(Reuters) – Xerox Corp cut its full-year profit forecast, blaming a strong dollar, and the company reported lower-than-expected quarterly revenue as its printer sales fell and costs rose.
The company is focusing on its services business, which offers business process outsourcing and document outsourcing, as sales of printers and copiers, its mainstay for over half a century, fall for over three years.
Xerox’s shares plunged as much as 14 percent to a 12-month low on Friday.
The company will take more than two years to reach its goal of getting three-quarters of its revenue from its services business, Chief Financial Officer Kathryn Mikells told Reuters.
Xerox’s services business accounted for 56 percent of its total revenue in the first quarter ended March 31, up from 54 percent a year earlier.
Mikells said the company expected its services business to account for two-thirds of its revenue in “a couple of years,” helped by acquisitions.
“We’re expecting to do up to $900 million in acquisitions this year and early next year,” she said.
Revenue from the services business rose 1 percent on a constant currency basis, while revenue from its printers and copiers business fell more than 10 percent.
Xerox said it expected its 2015 revenue to fall by 1 percent on a constant-currency basis. It had earlier said it expected revenue to stay flat.
The 110-year-old company gets about a third of its revenue from outside the United States. The dollar has risen about 23 percent against a basket of major currencies in the past year.
Xerox said costs in its services business rose due to a delay in the implementation of a platform for a government healthcare client.
The company cut its 2015 margin forecast for the services business to 8.5-9.0 percent from 9-10 percent.
Xerox also cut its full-year adjusted earnings forecast to 95 cents-$1.01 per share from $1.00-$1.06.
Analysts on average were expecting $1.02 per share, according to Thomson Reuters I/B/E/S.
Net income attributable to Xerox fell 20 percent to $225 million in the first quarter, while revenue declined 6.3 percent to $4.47 billion.
Excluding items, the company earned 21 cents per share
Analysts on average had expected earnings of 21 cents per share and revenue of $4.56 billion.
Xerox shares closed 8.8 percent lower at $11.99 on the New York Stock Exchange on Friday, after hitting a low of $11.32 earlier in the day.