Xerox Corp.’s (NYSE:XRX) shares compressed by 13% on Monday after the copier company released first-quarter results showing profit sank 85% and the costs of breaking up the company would spill over into this year too.
Xerox said early this year it will separate by the end of 2016 into two companies: one focused on selling and maintaining its traditional copiers and printers, the other focused on providing business services.
Xerox plans to cut about $700mln in annual costs this year to prepare for the split.
On Monday, the company backed its full-year adjusted earnings target but said higher costs tied to reorganising the company would reduce its overall 2016 profit per share forecast to between 45 cents and 55 cents, down from its earlier target of 66 cents to 76 cents.
The company also lowered cash-flow forecasts and said it would not buy back shares this year, a move aimed at saving enough cash to put both companies on firm footing after the split. Xerox repurchased about $1.3bn of its stock last year.
Xerox shares closed down 13.3% at $9.68.