Xerox Slashing 2500 Jobs Worldwide, Writes-Off $100 Million

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Xerox Slashing 2500 Jobs Worldwide, Writes-Off $100 Million Xerox CEO Ursula Burns sent a signal three weeks ago that bad news was coming.

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http://finance.yahoo.com/video/cnbc-29093777/xerox-ceo-updates-strategy-31109363.html

As she and other company executives announced third-quarter financial results, they also looked ahead to the fourth quarter and said they would spend $100 million on "restructuring" — usually corporate-speak for layoffs.

On Tuesday, Xerox provided some details of that restructuring: By the end of the year, 2,500 current employees will be former employees.

The layoffs amount to less than 2% of Xerox’s worldwide workforce of 146,000 people. Those losing their jobs will be "mainly in the services side of the business," said Karen Arena, a spokeswoman at corporate headquarters in Norwalk, Conn.

"We’re not breaking it down any further than that," Arena said. "We’re not going to be making any more formal announcements. I’m sure the managers will be talking to the affected people during the fourth quarter."

Most of the Xerox workers in the Rochester area — especially at the manufacturing campus in Webster — are on the technology side of the company, not the services side. So that may indicate Rochester won’t be hit too hard.

Xerox expanded tremendously — adding 75,000 people — when Burns engineered the $6.4 billion acquisition of business process outsourcing company Affiliated Computer Services in 2010.

That deal began a transformation, changing Xerox from a company based on printers and office equipment to one based on services it performs for its clients.

Speaking to investors and Wall Street analysts Tuesday in New York City, Burns and others on her executive team predicted the services business will generate two-thirds of Xerox’s revenue by 2017, up from about half this year and helping offset slowing demand for paper documents.

"We’ll be able to have a low-growth business shifting to a high-growth business as we get more of our revenue from services," Burns said. "On balance, we’re making progress, not fast enough. I’m not patient."

Examples of the services Xerox now provides include automating payments for governments and processing claims for insurers as more consumers choose to view documents electronically.

Lynn Blodgett, who headed Dallas-based Affliated Computer Services and is now president of Xerox’s services operation, told investors that despite the growth of that part of the company, it isn’t as productive and efficient as it needs to be.

"We have a cost issue, not a revenue issue," Blodgett said. He outlined the restructuring plan and said Xerox also will use more low-cost labor, meaning workers overseas and those who work out of their homes.

Chief Financial Officer Luca Maestri said Xerox will take $100 million in charges in the fourth quarter to pay for the layoffs, expecting a savings of $130 million in 2013.

The company also announced a couple of shareholder-friendly moves:

• It will expand its share buyback plan. Xerox is repurchasing $900 million to $1.1 billion worth of stock this year and "expects to allocate at least $400 million in cash for share repurchase next year."

• It intends to increase the dividend payout to stockholders by 35% to 5.75 cents per share, beginning with the dividend payable on April 30, 2013.

Xerox stock rose 1.4% Tuesday to close at $6.42 a share. The price has fallen 19% this year compared with a 9% rise in the benchmark Standard & Poor’s 500 index.

http://www.cnbc.com/id/49803198
Xerox Takes $100 Million Charge, but Plans 2013 Dividend

Xerox said on Tuesday it would take a fourth-quarter restructuring charge of about $100 million, at the top end of a previously forecast range, but said it will raise its quarterly dividend next year.

Source: Xerox.com

The company, historically known for printers and copiers, will take the charge in its services business, which handles anything from toll systems to Medicare.

Xerox [XRX  6.2869    -0.0031  (-0.05%)   ] said it expects fourth-quarter earnings of 24 cents to 26 cents per share or adjusted earnings of 28 cents to 30 cents per share, including the charge.

The company said in October it would take a restructuring charge of $50 million to $100 million to account for a tougher economy as both government and corporate customers tighten budgets.

“We have seen an impact from weakness particularly in Europe on our technology business but we’re seeing strong revenue growth and improving earnings in our services businesses,” Ursula Burns, Xerox’s CEO Ursula Burns told CNBC on Tuesday.

 

 

More than half of Xerox’s revenue comes from services, after it bought Affiliated Computer Services Inc for $5.5 billion in 2009, but investment in those operations has put pressure on margins.

Xerox expects services to grow to two-thirds of revenue by 2017, "not only driven by the fact we are growing that portion of the business but because the market’s transitioning, customers are transitioning," Burns said. "They want more than a point solution."

The company had forecast a fourth-quarter profit of 29 cents to 31 cents per share and adjusted earnings of 33 cents to 35 cents per share, excluding the charge.

Xerox said on Tuesday it increased its share buyback program by $1 billion and will raise its dividend by 35 percent to 5.75 cents per quarter, beginning with the dividend payable on April 30, 2013.

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November 15, 2012 at 10:03 AM