How can a worldwide company with $19.2 billion (€21.9 billion) in revenues and $1.4 billion in income only be worth $12.25 per share?

Easily, if that company is Xerox. The worldwide document company announced earlier this week that it expected a third-quarter loss of 15 to 20 cents per share compared to earlier analysts' estimates of a profit of 12 cents per share. The company said earnings were hurt by unfavourable foreign exchange rates.

A falling euro means Xerox earns less when sales in Europe are converted into dollars. The euro has fallen about 13 per cent against the dollar this year, and this has sent the company's stock plummeting by 18 per cent.

"These results are obviously disappointing and completely unacceptable," said chairman Mr Paul Allaire. "Clearly, actions beyond resolving our operational issues are required, including major cost reductions, asset dispositions and a review of the dividend level. Aggressive actions to improve profitability in 2001 are being pursued."

Xerox has 2,600 employees at a plant in Dundalk, Co Louth, and at administrative headquarters in Dublin. Asked how this latest spate of bad news might affect those employees, company spokeswoman Ms Christa Carone said: "We have not discussed any employment impact anywhere in the world. There will be more detail on actual earnings disclosed on October 24th."

The latest forecast represents the fourth time in five quarters that Xerox has revised its profit forecast. Xerox earned $381 million in the year-earlier period. Wall Street's response to the latest news was swift. "They've lost total control of the company," Liberty Funds group analyst Win Murray told Bloomberg Newswire. "I'm surprised they didn't blame high fuel costs. They've hit about everything else."

Xerox had lost about two-thirds of its value in the past year because of problems with a sales force reorganisation, increased competition, bad debt at its Mexican subsidiary and management turnover. In a conference call early yesterday morning, Mr Allaire said that resolving the problems would require sales of significant assets, cutting research and development, a review of the dividend and cost reductions "beyond hundreds of millions" of dollars.

Some analysts expect that Xerox will sell its finance subsidiary, its production publishing business, its Content Guard subsidiary and its business selling printers and copiers through office-supply stores. With a price/earnings ratio of roughly 17.4, Xerox is ironically a far more profitable company than many high-flying Internet and e-commerce companies that have never shown a profit and are trading at far higher stock values.

But that is little consolation to the shareholders who are watching their portfolios shrink.