Xerox Corp flipped to a profit in the first quarter, but the leading provider of digital printers and document management services forecast a second-quarter profit weaker than analysts' views and cut its full year earnings outlook nearly in half.

The company said revenue fell 18 percent in the first quarter as slumping customer demand took its toll on sales of printing equipment and supplies.

During the first quarter, we saw an accelerated rate of decline in enterprise spending on technology, especially in Europe and developing markets, Anne Mulcahy, Xerox chief executive, said in a statement on Friday, adding that the company plans to focus on managing costs and generating cash.

Xerox derives some 70 percent of its cash flow from the sale of supplies, financing and services to repeat customers. But the economic downturn means that some companies are slowing or shelving their plans to buy new equipment or order service.

Net income in the first quarter was $42 million, 5 cents a share, compared with a loss of $244 million, or 27 cents a share. The year-earlier period included a $491 million charged related to a securities settlement.

Revenue fell to $3.55 billion from $4.34 billion.

Wall Street analysts had expected a profit of 4 cents a share, on revenue of $3.55 billion, but it was not immediately clear if results were comparable. Before Xerox late in March slashed its outlook, citing the effects of the weak economy, analysts had expected a profit of 17 cents a share.

The Stamford, Connecticut, company, which has rebounded from fiscal troubles earlier this decade, spurred by solid profits and improved market share, said it now sees second-quarter earnings per share in the range of 10-12 cents. Analysts had expected a profit of 14 cents, according to Reuters Estimates.

It also said it sees 2009 earnings of 50 cents to 55 cents a share, down from its previous target of $1.00 to $1.25.

Xerox stock closed on Thursday at $5.74 on the New York Stock Exchange. The shares have climbed about 32 percent since March 20, the day that Xerox warned its results would fall short of company targets.

(Reporting by Franklin Paul; Editing by Derek Caney, Dave Zimmerman)

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