Xeroxs share price fell to a new low of 2.61 ($3.75) after its credit rating was cut to junk status by Moodys Investors Service due to concerns about its liquidity.


The price showed signs of recovery as PrintWeek went to press closing at 3.31 on Tuesday (5 December).


Moodys took its action after expressing concern about Xeroxs weakened earnings and cash flow, and its heavy reliance on asset sales to run its business and pay debt maturing next year.


Xerox chief executive Paul Allaire expressed disappointment at the news, saying the companys turnaround plan, which included asset sales and cost cutting, was on track.


Xerox has about 0.75bn ($1.1bn) of debt maturing by the end of the year and 1.7bn more next year.


The news is another blow to Xerox, which has had a tough year former chief executive Rick Thoman resigned in May and disgruntled shareholders launched a class action lawsuit in September.


Xerox suffered a 88m third-quarter loss, and warned it would also lose money in the fourth quarter.


There are reports that it is planning to sell Gyricon Media, a division set up to make an electronic paper.


It is laying off 200 workers and cutting another 75 temporary jobs at two of its ink-jet design and manufacturing plants. In mid-November, it cut 350 white-collar jobs in the US. These are separate from the 5,200 staff Xerox plans to lay off by April 2001.


Story by Andy Scott