Xerox, facing fierce competition, is making strategic moves
Question: I am impressed with the results of Xerox Corp. but wonder if it can continue on this course.
Answer: As impressive as “the document company” has been lately, it isn’t overconfident.
Xerox has seen an improvement in spending on hardware and services by big business.
But Chief Executive Ursula Burns, who became president in 2007 and CEO in 2009, has said she can’t be sure that such improved conditions “will stay forever.” As a result, the firm is cutting 2,500 jobs worldwide in 2011, on top of 2,500 cuts announced last January.
Although it enjoys an enormous stream of revenue from leasing and servicing its office equipment and is a leader in high-end digital and color technologies, Xerox faces fierce competition.
In 2009, the company earned $485 million on sales of $15.2 billion. In the third quarter of 2010, its profit doubled from the year-earlier period, to $250 million, partly because of a $6.4-billion purchase in February of outsourcer Affiliated Computer Services.
Analysts on average expect Xerox earnings to increase 18% in 2011. But the average five-year forecast is for an annualized earnings decline of 1%.
Xerox’s stock price jumped nearly 40% in 2010.
Business services account for half of Xerox’s revenue. That’s in line with Burns’ ambition to transform Xerox from a copier company into a business-process and document-management firm.
To promote that shift, a global ad campaign set to run through 2011 spotlights 20 companies that use Xerox products or services. The ads star familiar figures such as Procter & Gamble’s Mr. Clean.
The firm has made other strategic moves, including its acquisition of Global Imaging Systems in 2007. The addition helped introduce Xerox products and services to small and mid-size businesses.
The average analyst rating on Xerox shares is a “buy,” consisting of four “strong buys,” three “buys” and three “holds,” according to Thomson Reuters.
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Andrew Leckey answers questions only through the column. E-mail him at yourmoney@tribune.com.
