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Xerox plans to lay off 3,000 workers companywide

Xerox Corp. said Friday it plans to decrease its companywide workforce by some 3,000 employees this year as part of a restructuring effort on the services side of the business.

Xerox ranked No.1 on the most recent Rochester Business Journal list of manufacturers and ranked fourth on the RBJ75 list of the region’s largest employer with 6,575 local workers.

The company currently employs 6,608 locally.

Xerox spokesman Bill McKee said it is too early to determine what the impact of the restructuring effort will be in the Rochester area. He noted Xerox’s services operations are worldwide, with some in the Rochester area.

During second quarter, Xerox recorded net restructuring and asset impairment charges of $157 million. Net restructuring charges of $11 million included $17 million of severance costs related to headcount reductions of approximately 420 employees worldwide, the company reported.

The restructuring plans come as the company on Friday reported decreases in its second-quarter earnings and sales as the company continues to rework its operating model.

Xerox reported net income attributable to Xerox of $12 million, or a penny a share, compared with $266 million, or 22 cents a share, in last year’s second quarter.

On an adjusted basis, net income for the most recent quarter was $246 million, or 22 cents a share, meeting analyst expectations.

Sales were down 7 percent to $4.59 billion, from $4.94 billion the prior year. The results were below analyst estimates.

Analysts polled by Thomson Reuters expected Xerox to report earnings per share of 22 cents on sales of $4.64 billion.

Ursula Burns, Xerox chairman and CEO, said the firm’s adjusted earnings were in line with its guidance, met its services and document technology margin expectations and delivered solid operating cash flow of $349 million in the quarter.

Xerox is focused on improving its services margin and is implementing restructuring actions and prioritizing investments to benefit from its new operating model, she said.

“We are doing everything we can to overachieve,” Burns said in a call to discuss the financial results. “It’s all about focus at Xerox.”

Revenue from the company’s services business, which represented 56 percent of total revenue, was $2.6 billion, down 3 percent. Revenue from the company’s document technology business was $1.9 billion, down 12 percent.

Xerox generated $349 million in cash flow from operations during the second quarter, ending the quarter with a cash balance of $1.6 billion. The company repurchased $395 million in stock in the quarter, bringing the total to $611 million in the first half.

The company is adjusting its 2015 capital allocation plans, increasing share repurchases by $300 million to $1.3 billion and reducing acquisition investments.

Xerox lowered its acquisition and merger estimates. It now plans to spend $100 million to $400 million on such deals this year. Xerox has already spent roughly $50 million in acquisitions this year, company leaders said.

Earlier this year, Xerox said it could be making significant acquisitions by mid-2015 and early 2016, with the company estimating it could spend upwards of $900 million on deals that would boost its growing services business.

Burns said this week that mergers and acquisitions are important to Xerox, particularly when it comes to its international business, but the driving focus for the remainder of the year will be on creating “an unshakeable focus on the organic side of the business.”

Xerox expects third-quarter 2015 earnings of 17 to 19 cents a share. Third-quarter adjusted earnings per share are expected to be 22 to 24 cents a share.

For full-year 2015, Xerox expects earnings of 69 to 75 cents a share and adjusted EPS at the lower end of the 95 cents to $1.01 a share range.

Shares of Xerox (NYSE: XRX) were trading midday around $11.05, up 2 percent from Thursday’s close of $10.81.

(c) 2015 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail rbj@rbj.net.

 

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