XEROX EARNINGS LAGGING.

Byline: Denise Lavoie Associated Press 

Xerox Corp. warned Friday that its fourth-quarter earnings may be as much as 40 percent lower than Wall Street analysts projected, blaming Y2K worries and foreign currency problems.

Investors immediately sent shares down more than 15 percent.

In a statement, the document systems company stressed that its estimate was preliminary. However, results for October and November indicate the reasons behind a disappointing third-quarter earnings results have intensified, Xerox said.

Analysts surveyed by First Call/Thomson Financial have been expecting earnings of 66 cents a share. But Xerox said it will fall well short of that.

The company blamed four major factors:

Lagging sales of high-end products because of customer concerns about the Y2K problem.

Higher-than-anticipated expenses due to the effects of reorganizing its customer administration system.

Lower-than-anticipated profits from its Brazilian operations as a result of the continuing economic weakness.

The strengthening of the U.S. dollar against European currencies and lower sales productivity in the U.S. and Europe.

``Quite frankly, the news couldn't be much more disappointing to us,'' Xerox Chief Executive Officer Rick Thoman told analysts.

Earlier, in a separate statement, Thoman said the problems would not hurt the long-range goals of the company.

``In 2000, the Y2K issue disappears, the U.S. customer administration issues will progressively improve, we expect some recovery in Brazil and our sales force reorganization will have been implemented.''