Shares of Xerox (XRX -0.22%) fell hard on Tuesday morning after a disappointing earnings report. The specialist in printing and digital document management solutions had recovered somewhat to a 10.6% price drop by 11 a.m. ET today, but it's still a hard hit.

Xerox by the numbers

There's a lot to unpack in this report, but let's start with the basic financial figures.

Your average Wall Street analyst expected adjusted first-quarter earnings of roughly $0.35 per diluted share on top-line sales near $1.53 billion. Instead, earnings stopped at $0.06 per diluted share and revenue landed at $1.5 billion.

Management held its full-year guidance steady, but the business is going through a lot of changes. Xerox announced a 15% head-count cut four months ago, and that process is ongoing.

The company refinanced much of its debt in recent weeks, stretching the maturity dates further into the future. The business structure is under reorganization, adding a third segment to the existing print and other group and the financial services division. The new global business services (GBS) group is absorbing noncore functions from the other two in an effort to simplify the reporting structure and cut costs.

But that transformation is also ongoing, and Xerox still reports its financial results under the same two-segment structure as always.

No pain, no gain?

And that's not even all of it. The company is also selling assets and leaving unprofitable geographical markets, mainly in South America. Product families that can't pull their business weight are also being considered for cancellation.

Chief operating officer John Bruno said that revenue should fall in 2024 as cost-cutting moves play out, but Xerox should be left with a more profitable business model in the end. Meanwhile, chief financial officer Xavier Heiss pointed to the workforce reduction and in-process reorganization of the sales team as the chief reasons behind low sales and high operating expenses in the first quarter.

The last few years have been brutal for Xerox and its investors. Sales are down, profit margins are paper-thin, and the stock price is down 38% in three years. I don't know if it has what it takes to run a successful document management business in 2024. The cost-cutting is ambitious, but perhaps a step in the wrong direction.

Long story short, I'm happy to watch Xerox from the sidelines until further notice.