Xerox unveils aggressive plans to restore investor confidence
By Battered by seven succes | 24 Oct 2000
Battered by seven successive profit warnings that have sent its share prices on Wall Street plummeting southward, Xerox Corporation, once a 'most admired company', launched aggressive plans to raise cash and restore investors' confidence in the US copier group.The plans propose a $2 –4 billion worth of asset sales and $1 billion in cost savings by the end of 2001. Anne Mulcahy, president and chief operating officer, also warned of outsourcing of manufacturing, asset sales and lay-offs that would reduce the workforce.
But Wall Street's immediate reaction was disappointment that there were no concrete announcements of disposals or spin-offs, as a result of which Xerox shares were 19 cents lower at $8.94 by lunchtime in New York.
The group has already frozen hiring and discretionary spending, except in the sensitive sales division. Ms Mulcahy was confident that the steps initiated would ensure that the company returned to growth and profitability in 2001.
According to Paul Allaire, chairman and chief executive, the company was also pursuing a number of deals, including the sale of half its 50-per-cent stake in Fuji Xerox to its joint venture partner Fuji Photo, besides plans to sell its Chinese operations to Fuji Xerox.
Xerox has also initiated an organisation-wide restructuring of businesses that could see its gradual exit from the financing business, which could be sold to GE Capital. Other initiatives include seeking investors in its inkjet printer business and selling its engineering systems business, which makes large-format copiers.
For its famed, and world-renowned, Palo Alto Research Centre, which has produced a slew of promising and path-breaking technologies, the company is seeking a partnership with venture capital firms that would help the centre commercialise its new technologies and products.
Besides a special advisory committee of the board being appointed to oversee the plans, the company has also appointed Merrill Lynch as its principal adviser.
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