Chairman and chief executive Anne Mulcahy attributed the improved performance to "the precise execution of a turnaround strategy".

Revenue was up 400m on Q3 and put an end to a string of five consecutive quarters of losses.

But full-year revenues for 2001 were down 1.56bn ($2.2bn) to 11.72bn. And fourth-quarter revenue was down 13% on the fourth quarter of 2000 to 3.1bn.

Including restructuring charges and a loss from Argentinian devaluation, Xerox made a fourth-quarter net loss of 2.8m.

However, Mulcahy maintained that Xeroxs core operations had strengthened and that it was in a position to "exploit future market opportunities in its production, office and services businesses".

Sales of the DocuTech and DocuPrint remained stable, maintaining share in North America.

However, European revenues fell 30%."Europe is more difficult, but its important to understand that its a market issue, rather than a loss of share issue. We expect this will be offset with the introduction of new platforms over the next 12 months, including the iGen 3 at the end of the year," said Mulcahy.

Xerox will focus on one-to-one marketing communications through a growth development initiative that involves a multi-million pound TV advertising campaign, followed by press adverts. It will draw attention to the benefits to businesses of using targeted and personalised documents for direct marketing.

"We want to highlight a new way of looking at Xerox," said Mulcahy. "This time last year we were laying plans for our new strategy. Today were delivering results, which reflect the success of our planning. 2002 looks set to be the biggest year in terms of new technology and services for Xerox."

Story by Rachel Barnes