However, earnings of 16 cents per share and $609m in cash flow were better than expected. according to the company, despite a drop in customer spending on new technology.

With cash flow up $167m on the previous year, Xerox has upped its cash-flow expectations to $1.5bn from $1.3bn for the full-year.

Burns said: "During the second quarter, we exceeded our expectations for EPS and cash flow, reflecting our disciplined approach to operational improvements across the board

"Gross margin and cash are up; expenses are down – all key factors to our strong financial position that is serving us well during this tough economy."

The company recorded total revenue of $3.7bn, which represents an 18% drop on the same period last year. This was impacted by a 29% fall in kit sale revenues, which Xerox put down to customers delaying their investment in new printing equipment.

Burns said though that while the industry is being affected with a decline in spending, a 5% increase in revenues from the previous quarter showed improvements.

"However, assuming current economic conditions persist, we expect revenue will remain under pressure during the balance of this year," she added.

Within the company's production printing division, revenues dropped 18% to $1,095bn though Xerox enjoyed a 2% increase in production colour printer installs. Profit in the division fell to $51m, a $36m decrease from the previous year.