Xerox has announced that it will cut 3 000 jobs company-wide. This comes after bad numbers in the second quarter.
The cuts are part of “a restructuring effort on the services side of the business”.
The company reported a net income of $12-million in the second quarter compared to $266-million in last year’s second quarter.
“Xerox seems to be in a near-permanent state of restructuring,” says George T Conboy, an investor and chairman of Brighton Securities. “They are not going to go bankrupt anytime soon. It’s not that dire of a situation.”
Xerox CEO Ursula Burns told investors Friday that the Connecticut-based printing and business process outsourcing giant will cut jobs and pull back on its government health care strategy after it saw another decline in revenues and profits for its quarter ending June 30.
Overall, total revenue was down 7 percent overall to $4.6-billion. Meanwhile its document technology business was down 12 percent to $1.9-billion and its services business — representing more than half of its overall revenue — was down 3 percent to $2.6-billion. Revenue fell slightly below the $4.64-billion analysts polled by Thomson Reuters expected.
Xerox posted a profit of $12-million, or a penny a share, for its quarter ending June 30, compared to $266-million, or 22 cents, during the same period a year earlier. Excluding items such as a $145-million software-impairment charge, adjusted earnings were 22 cents a share.
“We are intensely focused on improving our Services margin and are implementing restructuring actions and prioritizing investments to accelerate benefits from our new operating model,” says Ursula Burns, Xerox chairman and chief executive officer.
The company has struggled for a number of months from a decline of its printing business. Meanwhile, Xerox’s push into the business process outsourcing area has not grown as quickly as it had hoped. Currency headwinds have whipped through US companies’ income statements lately.
“We delivered adjusted earnings in line with our guidance, met our Services and Document Technology margin expectations and delivered solid operating cash flow of $349-million in the quarter,” Burns says.
Xerox shares have dropped 22% since the beginning of the year, but were up about 1,2% Friday to close at $10.94. The company adjusted its earnings per share expectations to be between 22 and 24 cents for its third quarter. It now expects earnings for the year to be in the 95 cents to $1.01 range. The company ended the quarter with a cash balance of $1,6-billion.
Meanwhile, New York City-based S&P Capital IQ reiterated its “strong buy opinion” on Xerox stock, while lowering its target price to $13 per share.
Xerox says it has spent $611-million in repurchasing its own stock in the first six months of the year, or about $395-million in the second quarter. George T. Conboy, an investor and chairman of Brighton Securities, questioned that strategy, adding that the money should be used on expanding current operations, other acquisitions or to issue a special dividend to shareholders.
Simply put, he explained, the company borrowed $50-million to buy back stock that lost value. Xerox shares were $13.86 on 31 December, 2014.