Xerox Stumbles To Another Loss, 'Strategic Options' Being Considered

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Xerox Stumbles To Another Loss, 'Strategic Options' Being Considered

 news 2015-10-26 at 3:26:06 pm Views: 667
  • #44130

    Xerox Stumbles To Another Loss, 'Strategic Options' Being Considered
    By Ezequiel Minaya

    Xerox Corp. said Monday it would launch a comprehensive review of its options, as the company posted its first quarterly loss since 2010 on a hefty charge.

    Chief Executive Ursula Burns noted that the company has already taken steps to cut costs and improve productivity and margins, but that “undertaking a comprehensive review of structural options for the company’s portfolio is the right decision at this time.”

    Ms. Burns, who has headed the company since 2009, said in a conference call that the review was in its early stages and few details have been set, but that a sale of the company was not being considered.

    “I really can’t get into any more detail because we haven’t progressed that far,” she said.

    Xerox has also undergone another recent shake-up—the company said earlier this month that chief financial office Kathryn Mikells was leaving. Ms. Mikells will become CFO of international beverage company Diageo PLC, and the company is searching for a replacement.

    The loss posted Monday comes as Xerox took a $385 million pretax charge tied to the interrupted government health-care projects in California and Montana. The Norwalk, Conn., company announced earlier this month that it would be taking the hit linked to the health-sector projects. Xerox projected that implementation plans for its Health Enterprise Medicaid platform in California and Montana would not be completed. The resulting charge represents settlement costs, among other impacts.

    Xerox, synonymous with paper copiers and printers, has been transforming its business as sales of its signature products fall in an increasingly digital workplace. But expanding into areas that include document management and bill processing hasn’t been smooth, with Xerox posting a recent run of quarters with declining revenue.

    The company has also battled the same currency pressures that have whipped through U.S. companies’ income statements lately.

    “We are not satisfied with our performance,” Ms. Burns said of the first nine months’ results. She added that it was likely that the company was done with significant acquisitions for the year.

    Sales in its services division, which accounts for more than half of revenue, were down 8% to $2.4 billion. The document technology business fell 12% to $1.8 billion in revenue.

    Overall, the company posted a loss of $34 million, or 4 cents a share, down from a profit of $266 million, or 22 cents a share, a year earlier. Excluding certain costs such as the project-related charge, the company posted earnings on a per-share basis of 24 cents.

    Revenue slipped 10% to $4.33 billion. Excluding currency headwinds, revenue declined 6%.

    Analysts surveyed by Thomson Reuters forecast per-share earnings of 23 cents a share on revenue of $4.54 billion.

    Xerox also said it expects fourth-quarter adjusted earnings of 28 cents to 30 cents a share, in line with analysts’ expectations of 29 cents, as well as full-year adjusted earnings at the low end of 95 cents to $1.01 a share. Analysts expect 95 cents.