A broker's downgrade of online retailer Amazon was also quoted as a cause for the slide in share prices. Before the news from Xerox, many analysts had expected strong gains on Wall Street, following good results from tech firms eBay, Compaq and Nortel Networks on Tuesday. Xerox results were actually in line with Wall Street estimates, but those had already been sharply lowered in anticipation of a drop in profits. And things are set to get worse. The company had problems shifting its highly profitable publishing products.
Most sales now come from lower margin products and services.
Accounting irregularities at its Mexico subsidiary created further trouble, and prompted an investigation by the US Securities and Exchange Commission. Mr Allaire, though, promised that a turnaround would be felt from the fourth-quarter onwards. The firm recently sacked its chief executive Rich Thoman, following a messy reorganisation that cut deep into profits. Xerox and its famous research laboratory in Palo Alto, California, once were at the cutting edge of the high-technology industry. In recent years, however, the company has failed to capitalise on its power to innovate.