Xerox doubles profits while continuing job purge
Xerox eliminated another 900 jobs between July and September as sales reached a quarter-century low, but the company booked another quarter of strengthening profitability under CEO John Visentin.
Xerox revenue dropped 6 percent in the third quarter from a year earlier to $2.2 billion, but the Norwalk-based office equipment maker more than doubled profits to $221 million. The company expects China’s ongoing tariff dispute with the United States to have a $24 million impact on its bottom line this year.
It was Xerox’s lowest quarterly revenue total dating back to 1995, the earliest the Securities & Exchange Commission posts Xerox annual reports online. The company expects to record just over $9 billion in revenue this year, which would be off 8 percent from its 2018 sales, and profits of $740 million this year after a $374 million gain in 2018.
Under Visentin who was installed as CEO last year by activist investors Carl Icahn and Darwin Deason, Xerox has been purging jobs through a mix of layoffs, attrition and an outsourcing agreement with HCL Technologies earlier this year. Xerox pegs at $640 million the gross savings it achieved through the first nine months of 2019 as a result of its “Project Own It” restructuring plan.
“While we’ve made progress, we have more work to do here,” Visentin told investment analysts during a Tuesday conference call. “During the first half of the year, we started executing several components of Project Own It. ... We intentionally moved fast, knowing there would be some disruption — the strength of our third quarter (results) demonstrates our ability to rebound and react fast to change.”
Xerox shares are up by half this year to above $34, with the company’s stock up 12 percent on Tuesday. Icahn and Deason waged a successful campaign in 2018 for control of the Xerox board, on the heels of the board accepting a $6 billion buyout offer from Japan-based Fujifilm Holdings that the billionaires insisted represented a discount to the iconic American company’s actual and intrinsic value.
Even as it has cut jobs and costs in the Icahn era, Xerox has reinvested in its high tech roots, finalizing in August a plan to add a technology development center in Cary, N.C. with $12 million in incentives. The company currently lists just over 40 open jobs in North Carolina, a handful more than are available at its historic base of operations in Rochester, N.Y., with Xerox having about 10 openings in Norwalk.
The company informed investors on Tuesday that after weighing multiple bids for a unit that provides financing to customers for the purchase of its systems, Xerox has elected to retain the business.
Early in the third quarter, a federal judge in New York ordered four men to pay Xerox more than $10 million in restitution, as part of a sentencing that landed jail sentences for three of them. Under the fraud, the men misrepresented to Xerox the amount of ink toner being used by a sham company they created, while covertly reselling toner Xerox shipped them under the ruse.
Alex.Soule@scni.com; 203-842-2545; @casoulman