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Readers weigh in on Xerox split

The majority of respondents to this week’s RBJ Daily Report Snap Poll say Xerox Corp.’s plan to split into two public companies is a positive for shareholders but a negative for Rochester-area employees.

Xerox Corp. on Friday said it would split into two public companies. The move will create a technology company focused on document management and outsourcing, with roughly $11 billion in 2015 revenue; and a business process outsourcing firm with $7 billion in 2015 revenue. Xerox aims to complete the separation by year-end.

“These two companies will be well-positioned to lead in their respective rapidly evolving markets and capitalize on the opportunities that now exist to expand margins and increase market share,” Chairman and CEO Ursula Burns said.

The plurality of respondents—more than 40 percent—rated Ursula Burns’ overall performance as Xerox CEO as poor.

Locally, Xerox employs roughly 6,400 people, 1,600 at Xerox Square downtown and 4,800 at its Webster manufacturing complex. In July 2009, when Burns became CEO, Xerox had 6,935 workers here.

Xerox also announced a three-year strategic transformation program designed to achieve $2.4 billion in cumulative savings across all its segments. And the company reported full-year 2015 earnings and sales that were lower than in 2014 but topped Wall Street expectations.

Xerox has faced increased pressure since last fall, when activist investor Carl Icahn disclosed he had accumulated at least a 7 percent stake in the company. In a filing Friday, he disclosed his share has increased to 9.12 percent. Icahn will get to name three members of the services company’s nine-person board, and he will advise its CEO search committee.

Since the beginning of the year, Xerox stock has traded below $10 a share, off some 30 percent since its recent peak in late 2014.

More than 435 readers participated in this week’s poll, conducted Feb. 1 and 2.

In your view, is Xerox Corp.’s plan to split into two public companies positive or negative for…

Shareholders    
Very positive: 20%
Somewhat positive: 56%
Somewhat negative: 15%
Very negative: 9%

Xerox’s Rochester-area employees    
Very positive: 4%
Somewhat positive: 15%
Somewhat negative: 39%
Very negative: 43%

How would you rate Ursula Burns’ overall performance as Xerox CEO?
Excellent: 1%
Good: 18%
Fair: 38%
Poor: 42%

For information on how the Snap Polls are conducted, click here.

COMMENTS:

It probably spells the beginning of the end for another iconic Rochester employer. So sad.
—George Thomas, Ogden

Once again the senior management and especially Ursula Burns will get their golden parachutes while Rochester loses again. Quarter after quarter and year after year of declines of this once great company, the CEO is praised for her leadership for bringing on this “transition.” That is absurd.
—Steve Brunette

The split and sale will be done in the name of cost reductions and savings. The savings will come from employee job cuts and is not a new strategy or one that will establish growth like investments in R&D and new products. Thumbs down!
—John Nufryk

Thought we learned in the 1960s that combining unrelated businesses does not create value, only confusion.
—Jim Haefner, Pittsford

It is ironic that the acquisition of (Dallas-based Affiliated Computer Services Inc.) was Ursula Burns’ initial achievement when she took the reins of Xerox and has been found to be an unworkable failure. Financially and culturally, the services business is incompatible with the core Xerox business. It should have been obvious at the time, but her vision missed this important and key fact! The cost of this adventure was the dismantling of the printing business and the loss of the key assets that made Xerox a great company—its employees. The core business bled key employees as the services business took priority and the attention of the company leaders and the board. Today, the employee base is no longer motivated to be the best and it will take a real leader and an infusion of resources to reverse the mess that she has created. The current state is far worse than when David Kearns led the company to overcome the issues with foreign competition. (Burns) took a great company and made it lose its edge.
—Dave Coriale, Webster

As I live and work in the Syracuse area I am not that familiar with Xerox’s activities. Usually however, when a company gets large enough, and profitable enough, a split like this will make the two new companies more competitive in the marketplace.
—Sam Doubleday

It is obvious that after investing billions in the service business, that this performance could not continue. Therefore, bringing a team to concentrate on equipment and a different team to concentrate on service should advance both causes.
—J.A. DePaolis, Penfield

Xerox has been a beast with two heads for many years now. I’m happy to see the beast split in two as I believe it will bring greater focus to each line of business.
—Ryan Peck, Rochester

On what basis are we to rate Ms. Burns’ performance? What information other than what is filtered through the local media are we to use? Isn’t rating Ms. Burns’ performance up to the Xerox board and the shareholders? Let them rate her.
—Keith B. Robinson,
Diamond Packaging

Xerox will devolve into an office supply company.
—Tim Hansen, S.I. Newhouse School of Public Communications

Reminds me, back in the day, when Kodak spun off Eastman Chemical! Good for the latter, just a matter if time for the former (pun intended!).
—Tom Zimmerman,
Z2 Architecture, Canandaigua

Good plan for whom? The hedge fund guys? Certainly. They get to know enough early enough to stay with the good side and sell off the carcass. The senior management? For sure, golden parachutes and all. For the “lunch bucket” guys in Webster? Nope. They get to worry about being in the same shape as their buddies were from Kodak. The retirees? Nope, again. How long is it going to be before those promised benefits get unpromised?
—Jay Birnbaum

Let’s face it, the benefits of gender diversity in the CEO suite is still an unproven concept! Just look at the CEO world out there right now. Can you name one woman CEO of a Fortune 500 company today that’s doing a great or outstanding job?
—Hal Gaffin, Fairport

2/5/2016 (c) 2016 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email rbj@rbj.net.

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