Xerox makes first moves to allay investor fears

Faced with increasing concern from Wall Street about its liquidity position and share prices falling more than 85 per cent since May 1999, leading copier, printer and office solutions company, Xerox Corporation, has been working hard to prove the skeptics wrong.

In the latest round of moves, the company has begun to lay off a large number of people in the US, part of a broad restructuring that the management is undertaking. While the company is not stating how many jobs it will cut in the current round, it is estimated that around 350 people have already been told to leave.

Despite such efforts, financial analysts are not very impressed. Analysts still believe that the company should show much more progress on its earlier promise of selling of assets worth $2 - 4 billion.

Analysts' worry on the liquidity of Xerox increased further when the company made its official filing of quarterly results to US regulators last week. The filing revealed that by October 31, the company had drawn down $5.3 billion of its $7 billion revolving credit facility, $500 million more than it announced it had used by October 23. This rise was due to the difficulty faced by the company in raising money in the commercial paper market.

The company also faces the danger of having to repurchase upto $240 million worth of derivative contracts if the company's rating were to be downgraded to below investment-grade status.

While analysts express concern, Xerox management is trying to remain upbeat. Anne Mulcahy, president and chief operating officer, recently told an audience that Xerox would be "one of the greatest comebacks in business history".