The company also said it would take a first-quarterrestructuring charge "in the hundreds of millions of dollars" related to steps to improve productivity and reduce costs.

Xerox shares were up 3/4 at 22-3/16 in midday trade on theNew York Stock Exchange. Volume was 1.8 million shares.

Fourth-quarter net income was $294 million, or 41 cents perdiluted share, down from $615 million, or 84 cents a share, in the same period a year earlier.

The Stamford, Conn.-based company cited a sales slowdowndue to concerns over Y2K computer problems, the reorganization of its sales force and customer support operation, and reduced revenues and profits from its Brazilian operations.

President and Chief Executive Rick Thoman said of thefirst-quarter charge, "The exact size of this restructuring will be based on some difficult decisions we'll be making in the upcoming weeks." In a conference call with reporters and analysts, he added,"We think it will be in the hundreds of millions of dollars, but significantly less than the after-tax $1.1 billion charge we took in '98.

"It's likely that we'll take the charge before the close ofthe first quarter. We're serious about this productivity and cost-reduction effort. Some difficult choices must be made, and we're willing to make them, and we expect to be held accountable for their effectiveness."

Analysts surveyed by First Call/Thomson Financial hadexpected Xerox to earn 40 cents a share in the fourth quarter. Just a month ago Wall Street had been forecasting 66 cents a share, but then Xerox warned that its earnings would fall 40 percent below that figure.