Operating income declined 36% to $158m compared to $247m in the same period last year. Basic EPS was $0.14 compared to $0.29 last year. Cash and cash equivalents at the end of the quarter was $1.2 billion.

The company said equipment revenue declined 29% to $802m, while service, outsourcing, and rentals revenue fell 9% to $1.94 billion. Finance revenue fell 10% to $178m, while supplies, paper and other revenue declined 18% to $753m.

During the quarter, the company elevated CFO Lawrence A Zimmerman as vice chairman of the company. It also resolved all patent disputes with Acacia Research subsidiary International Printer by signing a license agreement covering a patent portfolio relating to networkable multifunction printer technology. It also announced plans to acquire IT services vendor Affiliated Computer Services for $6.4 billion to move into the growing IT outsourcing business.

Xerox chief executive, Ursula Burns, said: "Our third-quarter performance reflects our continued disciplined approach to managing cash and reducing costs. As a result, we exceeded our expectations for earnings and operating cash flow, and are benefiting from operational improvements that are mitigating the economic challenges."

The company said it expects fourth quarter EPS in the range of $0.20 to $0.22 and fiscal 2009 EPS in the range of $55 to $57.

A service of YellowBrix, Inc.