Tuesday, April 23, 2013

Xerox's technology business continues to struggle

An iffy economy and a new feature on some of its multifunction printers drove down sales for Xerox Corp. in the first quarter of 2013.

The Connecticut-based printing and business process outsourcing company announced its latest quarterly financial results Tuesday. And for the three months ending March 31, the Rochester area’s largest publicly traded employer saw its revenues — at $5.36 billion — down 3 percent from the same quarter a year earlier. While Xerox’s BPO services continue to grow — up 4 percent and now accounting for 55 percent of the company’s income — the technology side of the house is struggling more.

In a statement, CEO Ursula Burns said the technology business — the umbrella under which sits everything from office equipment to big digital printing presses, as well as the business of supplying and servicing them — was hampered in part by Xerox in February announcing its new ConnectKey software system for multifunction printers. Those printers, however, did not begin shipping until the second quarter. Equipment sales were down 11 percent during the quarter.

“We’re continuing to shift our business model to adapt to market trends by expanding indirect distribution and streamlining our supply chain and product portfolio,” Burns said. “These changes, along with implementing broader operational improvements across the company, will result in increased margins that will help us scale profitable revenue in services while maintaining strong market share in document technology.”
After expenses, Xerox had profits of $296 million or 23 cents per share, compared with $269 million or 19 cents per share a year earlier.

Xerox’s sales fell slightly short of Wall Street expectations, but exceeded them on profits. Analysts surveyed by Bloomberg had expected, on average, revenues of $5.49 billion and profits of about $254 million or roughly 20 cents per share.

Business services have been an ascendent part of Xerox’s operations since 2010, when it bought BPO company ACS. Since then, while Xerox’s technology business has been stagnant or declining, services have grown to now represent the majority of money the company takes in. That continues to raise questions about the fate of local Xerox operations, particularly the Webster manufacturing campus where the company makes high-end digital presses and toner. At the end of 2012, Xerox employed 5,800 locally.

Citing the economy, Xerox in October said it planned roughly $100 million worth of restructuring — which typically translates into layoffs — to get costs down. And Xerox said Tuesday it expects to spend about $35 million between now and the end of June on further restructuring. Worldwide, Xerox employs about 143,200 — down 4,400 from just three months earlier as the company goes through some restructuring.
Xerox spokeswoman Karen Arena said she did not have specific information on the planned second-quarter restructuring and how many jobs might be affected, but that “we’re taking the appropriate actions to better adjust our cost base for market realities.”
“It was a slow start in document technology,” Arena said.