Xerox Reviewing ‘Options’ — But Not Sale

The company's stock has not benefited from earlier restructuring efforts, losing more than a quarter of its value this year.
Katie Kuehner-HebertOctober 26, 2015

Xerox on Monday reported its first quarterly net loss in nearly six years and said it was reviewing its businesses and capital allocation options  but not an outright sale.

Like rivals Lexmark International and Hewlett-Packard, Xerox has been hit by corporate customers cutting printing costs and consumers shifting to mobile devices. The stock has lost more than a quarter of its value this year.

“Although we already have taken steps to accelerate cost reductions and prioritize investments to drive improved productivity and higher margins, our board determined that undertaking a comprehensive review of structural options for the company’s portfolio is the right decision at this time,” Xerox CEO Ursula Burns said in a news release Monday.

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She told analysts in a conference call that the company was not currently considering a sale, “but all other options will be looked at as we progress through this review.”

“I don’t think [Xerox] would cut the dividend, so I expect them to sharply curtail their share repurchases until the company is in better shape financially,” Argus Research analyst Jim Kelleher told Reuters.

Xerox said in July it would revamp its government healthcare IT business and said it would discontinue sales of a software system that can support operations in call centers and document imaging. The company has also cut nearly 1,800 jobs so far this year.

Lexmark announced last week it had hired Goldman Sachs as an adviser as it explores strategic alternatives.

For the third quarter, Xerox lost $34 million, or 4 cents per share its first quarterly net loss since the first quarter of 2010. But excluding restructuring costs, it earned 24 cents per share. Revenue fell 9.6%, to $4.33 billion.

Analysts on average had expected a profit of 23 cents per share and revenue of $4.54 billion, according to Thomson Reuters I/B/E/S.

“During the third quarter, the company achieved adjusted earnings in line with our guidance,” Burns said. “We continue to focus on strengthening our offering portfolio, improving productivity and targeting our highest-margin segments.”

The stock fell more than 2%, to $10.11, in trading Monday.

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