Xerox yesterday began its most ambitious attempt to raise cash and restore investors' confidence in the US copier group, with a plan for asset sales of $2$4 billion (€2.4E4.8 billion) and $1 billion in cost savings by the end of 2001.

But Wall Street's reaction was disappointment that there were no concrete announcements of disposals or spin-offs. Xerox shares, battered by seven successive profit warnings since last October, were $0.19 lower at $8.94 by lunchtime in New York.

Earlier, the world's top copier maker said it suffered a third-quarter loss before special items of $128 million, or $0.20 per share.

The company posted a net profit of $339 million, or $0.47 a share, in the year-earlier quarter.

Analysts had forecast a loss of 19 cents per share. Xerox warned earlier this month that it expected a third-quarter loss of $0.15 to $0.20 per share, due to weak September sales, tougher competition and other problems.

Ms Anne Mulcahy, Xerox president and chief operating officer, warned that outsourcing of manufacturing, asset sales, lay-offs and staff leaving would reduce the workforce. She said the number "could grow quite large".

The group has frozen hiring and discretionary spending, except in the sensitive sales division, but Ms Mulcahy said that in its effort to cut its cost base, "we must go further and deeper to restore our profitability and improve cash flow". She said the company planned to return to growth and profitability in 2001.

Some analysts had hoped for an outright sale of the financing operations, possibly to GE Capital, General Electric's financial arm, which is understood to be in negotiations with Xerox.

Xerox has already had to draw on $4.8 billion of its $7 billion revolving credit facility because of difficulty accessing the commercial paper markets. This month it said it would cut its dividend by 75 per cent, saving a further $400 million annually.