xerox | Rochester Business Journal

Xerox Q3 sales, earnings down

Xerox Holdings Corp. on Tuesday reported a decline in third-quarter revenue and earnings but managed to beat Street estimates.

For the quarter ended Sept. 30, the document company reported sales of $1.77 billion, down roughly 19 percent from $2.18 billion in the year-ago quarter. Operating income for the quarter was $131 million, down from $262 million in the third quarter last year. On a per-share basis, earnings were down 40 percent to 41 cents from 68 cents a year ago.

Analysts had expected GAAP earnings of 2 cents on revenue of $1.61 billion.

“The flexibility and financial discipline we have built in our company enabled us to increase earnings and cash flow sequentially. While we can’t reliably predict the ongoing economic impact of the pandemic, we are prepared to respond however events unfold and are committed to delivering positive cash flow and earnings in the fourth quarter,” said Xerox Vice Chairman and CEO John Visentin. “Investments in digital solutions and services are paying off as companies prepare for a more hybrid work experience that shifts seamlessly between the office and home.”

Business highlights during the quarter include:

• Added or renewed contracts with Fortune 500 and public sector clients such as Aflac, Bell Canada, Mizuho Bank, the state of Illinois, the Texas Health and Human Services Commission, Purolator, the Union of Public Purchasing Groups in France and the Government of Bangladesh;
• Grew market share in production in the region Xerox serves and grew share in entry segments in both the Americas and EMEA. Maintained the top market share position in production in the Americas and EMEA, and maintained overall market share leadership for equipment sales revenue in the Americas, according to the most recent IDC data;
• Awarded a contract from the Defense Advanced Research Projects Agency to develop the next phase of the Ocean of Things, its project to expand what scientists know about the seas;
• Expanded the company’s software portfolio with the launch of DocuShare Go, a cloud-based, SaaS content management platform focused on the small and medium-sized business that automates how users organize, share, collaborate and back up business-critical content;
• Honored with several industry awards including “Best Innovation Project of the Year” by Health Tech Digital and named one of the “World’s Most Sustainably Managed Companies” by the Wall Street Journal; and
• Established a new diversity, inclusion and belonging roadmap, focusing on areas where Xerox can make the biggest impact within the company and society, including a partnership with A Better Chance, a nonprofit dedicated to increasing education, access and opportunity for young people of color.

Xerox ended the quarter with cash of $3.24 billion, up from $2.74 billion in the year-ago quarter. Total assets climbed to $15.35 billion from $15.05 billion a year ago.

For the nine-month period, net income fell to $115 million from $542 million in the same period last year. Due to the pandemic, Xerox officials declined to give future financial guidance.

“During the third quarter, corresponding with business reopenings, the rate of decline of equipment installations (including in areas of our business that support our hybrid workplace initiatives) improved, as did printed-page volumes,” officials said in the earnings report. “These operational improvements resulted in a moderation of our rate of revenue decline during the third quarter as compared to the second quarter, which gives us confidence in the resilience and readiness of our business to recover as progress is made to control the pandemic and as businesses and economies reopen.”

Officials added: “During the current year, the most significant impact from the pandemic has been on sales of our equipment and unbundled supplies. However, due to their transactional nature, these revenues experienced the largest recovery during the third quarter and we expect that they will continue to fluctuate and gradually improve concurrent with business reopenings.”

Shares of company stock (NYSE: XRX) spiked early on Tuesday to $19.06 but had settled at $18.63 at midday, down from Monday’s close at $18.92.

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Xerox releases annual social responsibility report

Xerox Holdings Corp. this week released its annual Global Corporate Social Responsibility Report detailing data, accomplishments and goals related to its environmental work, society and governance.

“While corporate social responsibility isn’t new, this year has crystalized what it really means, and the role we must play as we face three enormous challenges: the impacts of the pandemic, social inequality and climate change,” said Xerox Vice Chairman and CEO John Visentin. “I’m incredibly proud of the strong performance of the Xerox team during this extraordinary time. We have learned in profound ways just how interconnected we are, despite our differences, and that we must work together to make meaningful progress against all that challenges us as individuals and society.

Highlights from this year’s report include the company’s:

• Work to combat COVID-19, from producing low-cost disposable ventilators and hospital-grade sanitizer to helping prepare the U.S. Naval Ship Comfort and USNS Mercy for humanitarian missions, transitioning schools to remote learning and developing software that enabled companies to monitor the health of their employees;
• Addition of clean technology as Xerox’s fifth innovation pillar, focusing on identifying those innovations that help reduce harmful emissions and waste around the world; and
• Plan to achieve carbon neutrality no later than 2040 and reduce its greenhouse gas emissions by at least 60 percent by 2030.

In a letter from the CEO that accompanied the 78-page report, Visentin said that in addition to battling the effects of COVID-19, another challenge demanded immediate action: systemic racism.

“While Xerox has long been a leader in diversity and inclusion (D&I), we believe the best way to honor this legacy is to dig deeper, with a renewed sense of urgency,” Visentin wrote. “With such determination, we established a new diversity, inclusion and belonging roadmap to focus on the areas where we can make the biggest impact — both within and outside of Xerox. We held ‘All of Us Together’ conversations so employees globally could hear firsthand what our colleagues have experienced and personally understand what’s at stake.”

The company’s roadmap includes partnering with organizations such as A Better Chance, a non-profit dedicated to increasing education, access and opportunity for young people of color, accelerating the careers of high-potential employees who come from a diversity of backgrounds, among other things.

“With the enormous challenges this year has brought, we at Xerox are prouder than ever to help provide a more sustainable future for all. We have learned in profound ways just how interconnected we are, despite our differences, and that we must work together to make meaningful progress against all that challenges us as individuals and society,” Visentin wrote.

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Xerox revenues slump in second quarter

Xerox Holdings Corp. on Tuesday reported a significant drop in second-quarter sales and earnings, falling short of Street estimates for revenues by $80 million.

For the quarter ended June 30, the printer giant posted revenue of $1.47 billion, down $798 million from $2.26 billion a year ago. Operating income fell nearly 78 percent in the quarter to $62 million. Net income for the quarter fell from $181 million to $27 million.

On a per-share basis, adjusted earnings were 15 cents, down 81 percent from 79 cents in the second quarter last year. GAAP earnings fell to 11 cents per share from 60 cents a year ago. Analysts had expected a GAAP loss of 26 cents per share.

“I am proud of our employees who did what was necessary during this unprecedented disruption to support our business and clients, especially those delivering essential services,” said Xerox Vice Chairman and CEO John Visentin. “While the bulk of our markets were fully or partially shut down during the quarter, our team’s financial discipline enabled us to deliver positive earnings per share and cash flow while continuing to invest in key areas of growth.”

The bulk of Xerox’s revenues in the second quarter came from service and maintenance, which saw a drop from $1.4 billion last year to $949 million this year. Sales in the quarter fell to $460 million from $800 million in the year-ago quarter.

“No one can control or accurately predict what happens next. We have modeled numerous scenarios to ensure we have flexibility no matter how the pandemic continues to impact global business,” Visentin said.

In response to the COVID-19 crisis, Xerox did not provide full-year financial guidance.

“The continued uncertainty around the spread and resurgence of the virus has changed our prior expectation for an inflection point following the second quarter. While Europe, Canada and some areas of the U.S. are reopening after controlling the rate of new infections, other areas in Latin America and parts of southern and western U.S. are seeing surges that have forced the rollback of business reopenings and impacted their economies,” according to the earnings report. “We experienced some signs of recovery, and a moderation in our rate of revenue declines during the month of June, however, we expect that our business will continue to be impacted by the ongoing uncertainty. Accordingly, we now expect a slower pace of gradual recovery in the second half of the year.”

Shares of company stock (NYSE: XRX) were down more than 2 percent to $15.44 in morning trading Tuesday.

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Area businesses switch things up for pandemic

As the pandemic continues to clamp down on numerous industries, more local manufacturers find ways to stay relevant and help those in need.

L3Harris Technologies this month began offering its BeOn software application for free to healthcare and public safety workers, allowing users to turn their smartphones, laptops and other devices into an encrypted public safety radio. This enables immediate communications to individuals or large talk groups.

L3Harris has made the service available for free for 90 days to agencies responding to COVID-19 operations.

“While first responders rely on handheld radios for their day-to-day communications, many of these healthcare heroes do not carry or have access to handheld public safety radios,” said Dana Mehnert, president of L3Harris’ Communication Systems, headquartered here. “Agencies that are currently using BeOn in their communities have called this offering a ‘game-changer’ for their COVID-19 response efforts as they are now able to connect many users from a variety of groups without having to issue, manage and sanitize handheld radios.”

Rochester-based Herogard, a health and wellness startup founded by scientists, doctors and engineers, is offering medical-grade filter face masks to the community. The masks are available for $25 for 30 and for every purchase, Herogard will donate masks to essential workers and marginalized communities who would otherwise not have access to vitally needed protection

The first beneficiary of the masks was Foodlink Inc., the regional food bank serving 10 counties in the Rochester area. Foodlink’s essential workers will receive the masks as they mobilize resources and distribute food to food-insecure households. Foodlink said the first donation of masks would be used by its kitchen workers.

Face mask produced by Century Mold (photo provided)

In March, Century Mold, one of North America’s leading injection molders, began making medical face shields for local health care facilities. The arrangement was the result of a call from Rochester Regional Health and Rochester General Hospital, said Terry Hodge, Century Mold’s executive vice president.

“I could not be more proud of our team,” Hodge said in a statement at the time. “By working 20-plus hours a day … our team was able to apply our engineering, tooling and manufacturing expertise and fill a critical need for a very important new partner. We have always been willing to help others, but now we are helping our entire community better face the health challenge in front of us.”

BigSky Technologies LLC is a materials science company that manufactures textile finishes inspired by nature. The company recently said its GreenShield Co. division is responding to the global coronavirus pandemic by evaluating its products’ effectiveness in reducing the ability of the virus to contaminate and transmit on different surfaces.

A small amount of fluorochemical used in the GreenShield finish provides a surface that repels oil-based materials such as viruses. Because COVID-19 has an oily lipid outer layer, breaking the layer causes the virus to fall apart. Company officials said that when coming into contact with materials treated with GreenShield viruses do not adhere to the surface but rather roll off the surface structure, making the product particularly attractive for lab coats, surgical gowns and other protective clothing.

“The little bit of fluorochemical-based GreenShield C6XL goes a long way towards clean, safe surfaces on personal protective materials,” said Cathy Fleischer, managing partner and co-founder of BigSky Technologies. “In the crisis that we are dealing with, GreenShield treated fabrics are easy to clean, reduce their impact on the environment and increase health and safety.”

Xerox Holdings Corp. joins a list of local companies switching things up and manufacturing hand sanitizer from frontline healthcare workers. The document company expects to produce some 140,000 gallons of hand sanitizer by June 2020 at its facilities in Webster and in Toronto.

“This is a time for every company, every person, to look at what they can do to help society,” Xerox Vice Chairman and CEO John Visentin said in a statement last week. “Essentials like hand sanitizer will continue to be in high demand. The team moved fast, figured out how to get over the hurdles and are starting to deliver product — all in under a month.”

Xerox, in a partnership with Vortran Medical Technology, is helping to speed and scale the production of the GO2Vent ventilator and related Airway Pressure Monitor for hospitals and emergency response units fighting the virus.

Carestream Health has increased production of its portable diagnostic imaging systems, noting that as unlikely facilities begin to function as urgent care units, the Rochester company’s DRX-Revolution Mobile X-ray System and DRX-Revolution Nano Mobile X-ray System bring the X-ray exam to the patient’s bedside.

“Our manufacturing plans and warehouses are operating at full capacity with employees putting in long hours and extra days to support the healthcare professionals who are on the front line of this exhausting fight,” said Charlie Hicks, Carestream’s general manager for premium tier solutions. “Likewise, Carestream suppliers and partners are ramping up production to help support this humanitarian crisis.”

Similarly, L-Tron Corp., a Victor firm that offers technology products and solutions to automate data capture, has tripled its mobile X-ray components, based on increased customer demand. L-Tron engineers supply custom-configured components for seamless integration into mobile X-ray machines and antibody blood analyzing tests, both of which are used for COVID-19 diagnosis, treatment and study by medical professionals.

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Xerox reports drop in Q1 earnings, withdraws fiscal guidance amid pandemic upheaval

Xerox Holdings Corp. on Tuesday reported a $320 million drop in first-quarter revenue and a 45-cent decline in earnings, missing Street estimates for EPS. The document company also withdrew its guidance for fiscal 2020 due to economic uncertainty surrounding the COVID-19 pandemic.

For the quarter ended March 31, the Norwalk, Conn.-based manufacturer reported revenue of $1.86 billion, a nearly 15 percent decline from a year ago. Adjusted operating income for the quarter fell $152 million to $87 million. On a per-share basis, earnings were 21 cents, down from 66 cents a year ago.

Analysts had expected non-GAAP earnings ranging from 39 cents to 47 cents on revenue ranging from $1.46 billion to $1.91 billion.

“During this unprecedented time, we are committed to doing everything in our power to protect our employees, customers, partners and society, because we all have a critical role to play battling the COVID-19 pandemic,” said Xerox Vice Chairman and CEO John Visentin. “While Xerox saw an immediate impact to our business due to the rapid implementation of lockdown measures globally, the disciplined approach we implemented over the last two years provided a foundation to move quickly to preserve cash, continue operations, provide support to our many clients on the frontlines, and apply our manufacturing and R&D expertise to help save lives. I’m incredibly proud of the Xerox team’s dedication and ingenuity during this extraordinary time.”

Revenues in the quarter were heavily impacted by a nearly 28 percent decrease in equipment sales and an 11 percent decline in service, maintenance and rentals.

The company’s Securities and Exchange Commission filing included several mentions of the pandemic:

“The extent of the impact of the COVID-19 pandemic on our business and financial performance, including our ability to execute our near-term and long-term business strategies and initiatives within the expected time frames, will depend on future developments, including the duration and severity of the pandemic and the extent and effectiveness of containment actions, the availability of therapeutics and the development of a vaccine, which are uncertain and cannot be predicted.

“Our operations are being negatively affected by a range of external factors related to the COVID-19 pandemic that are not within our control. For example, most countries, states, counties and cities have imposed and continue to impose a wide range of restrictions on our employees’, partners’ and customers’ physical movement to limit the spread of COVID-19 including travel bans and restrictions, quarantines, shelter-in-place orders, and business limitations and shutdowns. Such restrictions limit our ability, as well as that of our channel partners, to sell, install and service our equipment for our customers, negatively impacting our operations and financial performance. Further, many countries are requiring businesses to remain closed unless they or their employees are deemed essential. In turn, businesses are requiring their office employees to work from home for extended periods of time, which is negatively impacting both sales and use of Xerox products, supplies and services. The longer this persists, the greater effect it will have on our business.”

Xerox in the first quarter reduced its worldwide headcount by 300, compared with a 150-job reduction in the first quarter last year. The company also vacated its hostile takeover bid of HP Inc. as a result of the economic uncertainty from the pandemic.

Xerox’s first-quarter business highlights include:

• Identified ways to address some of society’s biggest needs created by the COVID-19 crisis such as producing FDA-approved, low cost ventilators; antiseptic hand sanitizer; and medical-grade face masks.
• Supported clients on the frontlines including federal, state and local governments; health care providers; retailers; and emergency responders such as Imperial College Healthcare NHS Trust, Cleveland Clinic, the Defense Logistics Agency, Morrisons and the Bank of New York Mellon.
• Expanded Xerox’s portfolio with the launch of IT Services for remote workers and learners, Virtual Print Management Service and Workplace Cloud Fleet Management, three offerings designed to support and accelerate digital transformation efforts of clients.
• Closed four acquisitions, expanding Xerox’s small and medium-sized business market presence in the U.K. and Canada.

Shares of company stock (NYSE: XRX) opened Tuesday at $17.82 and were relatively stable in morning trading.

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Xerox to produce ventilators in Webster

Xerox Holdings Corp. has partnered with Vortran Medical Technology to produce thousands of ventilators from Xerox’s Webster campus, the two companies announced Tuesday.

The production will speed and scale production of Vortran’s GO2Vent ventilator and related Airway Pressure Monitor for hospitals and emergency response units fighting the battle against COVID-19.

Assuming a stable supply of essential parts, the companies will rapidly scale up production from roughly 40,000 ventilators in April to between 150,000 and 200,000 ventilators per month by June. Together, Xerox and Vortran could produce as many as 1 million ventilators in the coming months, the companies said.

While the GO2Vent is not a replacement for ventilators found in intensive care units, it is widely used in emergency situations, inter-hospital transport and MRIs. Given the shortage of ICU-grade ventilators, medical professionals are utilizing tools like this and other technology to support patients who do not yet or no longer need an ICU-level breathing device, which can be freed up for another patient.

“Our smartest minds met—virtually—with Vortran’s smartest minds and figured out how to mass-produce this critical technology,” said John Visentin, vice chairman CEO of Xerox. “We want to help make sure doctors, nurses and paramedics on the frontlines have the resources they need to help the rising number of patients with COVID-19.”

While Xerox plans to manufacture ventilators from its Webster facility, where the company was founded, Vortran will continue to manufacture ventilators at its current facility in Sacramento, Calif.

“The partnership with Xerox has one clear goal – to help save as many lives as possible. With Vortran’s proven technology and Xerox’s ability to hyper-scale manufacturing, we believe we can supply health care providers as many as 1 million ventilators in the coming months,” said Vortran Co-founder and CEO Gordon Wong M.D. “For all of us, this will be the most important thing we ever do.”

Vortran’s GO2Vent was designed for emergency use, natural disasters and disease outbreaks such as the COVID-19 pandemic. A gas-operated, disposable ventilator that can be set up within minutes and discarded after use by a single patient, it provides support via a secure airway and can be operated on a compressor, oxygen or air with a minimum of 10 liters per minute flow rates.

In addition to scaling up production of the GO2Vent and APM-Plus, Xerox and Vortran expect to compile and analyze data and feedback from health care professionals on the front lines of the battle against COVID-19 in order to design and mass-produce external, in-line modifications that can be added to the GO2Vent to expand the potential applications of this life-saving equipment.

Xerox shares (NYSE: XRS) closed Monday at $18.71 but had climbed to $19.21 in pre-market trading Tuesday.

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Xerox vacates plan to acquire HP

Xerox Holdings Corp. has bowed out of its plan to acquire HP Inc., the company said in a statement Tuesday.

“The current global health crisis and resulting macroeconomic and market turmoil caused by COVID-19 have created an environment that is not conducive to Xerox continuing to pursue an acquisition of HP,” company officials said in the statement.

In addition to withdrawing its tender offer, Xerox also will not seek to nominate its slate of candidates for HP’s board of directors.

“While it is disappointing to take this step, we are prioritizing the health, safety and well-being of our employees, customers, partners and other stakeholders, and our broader response to the pandemic over and above all other considerations,” officials said.

Xerox said there remain “compelling” long-term financial and strategic benefits from combining Xerox and HP.

“The refusal of HP’s board to meaningfully engage over many months and its continued delay tactics have proven to be a great disservice to HP stockholders, who have shown tremendous support for the transaction,” Xerox officials added.

On March 13, Xerox said it had suspended its efforts for a hostile takeover of the printer giant, saying it would halt its planned presentations to HP shareholders, but stressing that the market’s recent decline had not or would not affect its decision to acquire the company.

Since the beginning of March, Xerox shares (NYSE: XRX) have fallen from $32.25 to $17.67 in afternoon trading Wednesday. One year ago, Xerox stock was trading at $33.38. HP shares (NYSE: HPQ) have fallen from $20.96 at the beginning of March to $14.97 on Wednesday. On April 1 last year, HP stock was trading at $19.79 per share.

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Xerox suspends HP takeover attempt amid pandemic woes

Xerox Holdings Corp. has temporarily suspended its hostile takeover attempt of rival printer giant HP Inc. in light of the COVID-19 global pandemic. Xerox on Friday said it would halt its planned presentations to HP shareholders, but stressed that the market’s recent decline had not or would not affect its decision to acquire the company.

“In light of the escalating COVID-19 pandemic, Xerox needs to prioritize the health and safety of its employees, customers, partners and affiliates over and above all other considerations, including its proposal to acquire HP,” said Xerox Vice Chairman and CEO John Visentin in a statement. “As we closely monitor reports from government and healthcare leaders across the globe and work with colleagues in the business community to minimize the spread and impact of the virus, we believe it is prudent to postpone releases of additional presentations, interviews with media and meetings with HP shareholders so we can focus our time and resources on protecting Xerox’s various stakeholders from the pandemic.”

The friction between the two companies had heated up in early March after Xerox took its $24 per share, or roughly $34 billion, tender offer to HP’s board. The offer would amount to $18.40 in cash and 0.149 Xerox shares per HP share. Xerox had asked HP shareholders to tender their shares before 5 p.m. on April 21, conditioned on Xerox gaining a majority of HP shares.

“Our proposal offers progress over entrenchment,” Visentin said in a March 2 statement. “HP shareholders will receive $27 billion in immediate, upfront cash while retaining significant, long-term upside through equity ownership in a combined company with greater free cash flow to invest in growth and return to shareholders.”

HP didn’t see it that way.

“Our message to HP shareholders is clear: the Xerox offer undervalues HP and disproportionately benefits Xerox shareholders at the expense of HP shareholders,” said HP Chairman Chip Bergh in a March 5 statement. “The Xerox offer would leave our shareholders with an investment in a combined company that is burdened with an irresponsible level of debt and which would subsequently require unrealistic, unachievable synergies that would jeopardize the entire company.”

HP officials said the Xerox proposal essentially offers HP shareholders something they already own and would disproportionately benefit Xerox shareholders relative to HP shareholders.

The hostilities began last year, when negotiations between the two companies fell apart. Xerox wanted HP under its umbrella; HP was having none of that. HP accused Xerox of not providing adequate information when it was asked for due diligence. Xerox said it was willing to open its books to HP, but HP had yet to offer mutual due diligence.

The two companies went head to head and in November Xerox said it would pursue a hostile takeover. In early December, Xerox made good on its threats, via an investor presentation detailing its offering. Xerox’s proposition was to acquire HP for $22 per share, which would comprise $17 in cash and 0.137 Xerox shares for each HP share.

HP claimed the proposal significantly undervalued the company and showed concerns over Xerox’s balance sheets, including its high debts.

Xerox’s shareholder presentation suggested cost savings for the combined company of roughly $2 billion in two years and projected $1 billion to $1.5 billion of potential growth opportunities. Xerox said the combined company would be worth roughly $31 per share.

In January, Xerox secured $24 million in financing to prove to shareholders it meant business. Meanwhile, activist shareholder Carl Icahn, who was instrumental in the dismantling of a planned merger between Fujifilm Holdings Corp. and Xerox and the ousting of Xerox’s former CEO, had begun buying up HP stock. In December, Icahn urged HP leaders and shareholders to take the deal with Xerox.

Also in January, Xerox proposed a new slate of directors for HP’s board.

“HP shareholders have told us they believe our acquisition proposal will bring tremendous value, which is why we lined up $24 billion in binding financing commitments and a slate of highly qualified director candidates,” Xerox Vice Chairman and CEO John Visentin said in a statement at the time. “We believe HP shareholders will be better served by a new slate of independent directors who understand the challenges of operating a global enterprise and appreciate the value that can be created by realizing the synergies of a combination with Xerox.”

Since the beginning of 2020, Xerox shares (NYSE: XRX) have fallen from $36.93 to $20.71 Monday afternoon. HP shares have fallen from $20.79 at the start of the year to $14.65 Monday. However, much of that decline is related to the market crash that has occurred since the COVID-19 outbreak.

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Xerox Q4 earnings beat Street estimates, HP not impressed

Fourth-quarter sales fell more than 2 percent for Xerox Holdings Corp., the document company reported this week, but still managed to beat Street estimates.

For the quarter ended Dec. 31, Xerox reported revenue of $2.44 billion, down from $2.5 billion in the fourth quarter last year. Net income was $819 million, compared with $141 million in the year-ago quarter. On a per-share basis, earnings were $1.22, compared with 37 cents a year ago.

Consensus estimates were $1.09 per share on revenue of $2.43 billion.

“We are delivering on our three-year plan. We grew earnings per share, increased cash flow and expanded adjusted operating margin for the full year, and we improved our revenue trajectory in the second half of the year as our investments in the business gained traction,” said Xerox Vice Chairman and CEO John Visentin. “We accomplished this while returning more than 70 percent of free cash flow to shareholders, paying down approximately $950 million in debt and increasing investments in our innovation areas. We are well positioned to carry this momentum into 2020 and lead the way for long-overdue industry consolidation.”

For the full year, revenues fell from $9.66 billion to $9.07 billion, while net income improved to $1.36 billion, from $374 million in fiscal 2018. Diluted earnings per share were $5.80, compared with $1.38 a year ago.

At year-end, Xerox reported assets of $6.14 billion, up from $4.71 billion a year ago. That includes cash of $2.74 billion, compared with $1.08 billion a year ago.

Fourth-quarter and full-year results include a $77 million benefit associated with an OEM license agreement with Fuji Xerox. Xerox and Fujifilm Holdings Corp. announced last year that Xerox would sell its one-quarter stake in Fuji Xerox—an arrangement that began more than 50 years ago when Xerox was at its height in Rochester—back to Fujifilm.

Xerox officials noted several business highlights during 2019, including “expanding Xerox’s relationship with HP.” Since November, Xerox and HP have been engaged in a back-and-forth as Xerox attempts to curry favor among HP shareholders in a hostile takeover attempt.

HP officials this week told Bloomberg that Xerox’s earnings report doesn’t help with “fundamental concerns about the continued revenue declines and health of the Xerox business.” Xerox’s proposal would, in essence, ask that HP shareholders trade the value of HP’s balance sheet for “stock in a company of questionable value and expose (them) to meaningful risk, due to inordinate leverage and sustained, declining performance.”

Shares of Xerox stock (NYSE: XRX) initially took a hit this week, dropping 2 percent following the company’s earnings report, but have bounced back, opening Thursday at $36.85. The company’s 52-week range is $27.25 to $39.47.

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Xerox offers slate of directors in HP hostile takeover bid

In another round of unsolicited involvement, Xerox Holdings Corp. has offered up a slate of directors for HP Inc., a move the computer giant called “self-serving.”

As part of its ongoing hostile takeover attempt, Xerox this week said it would nominate 11 independent candidates to replace HP’s board of directors at HP’s annual meeting of stockholders.

“HP shareholders have told us they believe our acquisition proposal will bring tremendous value, which is why we lined up $24 billion in binding financing commitments and a slate of highly qualified director candidates,” Xerox Vice Chairman and CEO John Visentin said in a statement. “We believe HP shareholders will be better served by a new slate of independent directors who understand the challenges of operating a global enterprise and appreciate the value that can be created by realizing the synergies of a combination with Xerox.”

In early November, Xerox made a $33.5 billion acquisition proposal, which offered HP shareholders $22 per share, comprising $17 in cash and 0.137 Xerox shares for each HP share. HP shareholders would have owned roughly 48 percent of the combined company. The offer represented a 20 percent premium to HP’s closing share price of $18.40 on Nov. 5.

HP said the proposal “significantly undervalues HP and is not in the best interests of HP shareholders,” but also left the door open for a potential combination that would put HP in the driver seat. In return, Xerox pointed to cost synergies of more than $2 billion should the document company take control of HP.

Shortly thereafter, Xerox officials announced it would attempt a hostile takeover, going straight to HP shareholders with its proposal.

On Jan. 23, HP responded to Xerox’s proposed slate of directors, pointing a finger at Xerox majority shareholder Carl Icahn.

“We believe these nominations are a self-serving tactic by Xerox to advance its proposal, that significantly undervalues HP and creates meaningful risk to the detriment of HP shareholders,” HP officials said in a statement.

HP officials contend that value creation for its shareholders “is not dependent on a Xerox combination.”

“We believe that Xerox’s proposal and nominations are being driven by Carl Icahn, and his large ownership position in Xerox means that his interests are not aligned with those of other HP shareholders,” the statement read. “Due to Mr. Icahn’s ownership position, he would disproportionately benefit from an acquisition of HP by Xerox at a price that undervalues HP.”

Icahn—who led the charge against a Xerox and Fuji merger, eventually gaining control over Xerox’s new board—in December urged HP leaders and shareholders to take the deal with Xerox. In early November the activist investor had purchased $1.2 billion in HP stock; bringing his total stake in the company to more than 4 percent; he also has a nearly 11 percent stake in Xerox. A lawsuit filed last month against Icahn alleges he bought HP shares knowing that Xerox was considering buying the stock at a premium.

“Mr. Icahn has meaningful influence over Xerox and its board of directors given this ownership position; the role he played in the appointment of Xerox’s current CEO, who is a former Icahn consultant; and the ties Mr. Icahn has to members of the Xerox board, including Xerox’s chairman, an Icahn employee,” the HP statement concludes.

In defending its current board, HP officials said the company benefits from an independent board, including an independent chairman and 10 of 12 independent directors who include individuals that bring skills and expertise “in advancing HP’s strategy across personal systems, print and 3D and driving sustainable, profitable growth and value creation.”

Xerox has proposed the following nominees:
• Betsy Atkins, former chair and CEO of Clear Standards, a software company;
• George Bickerstaff, co-founder and managing direct of M.M. Dillon & Co., a health care and technology boutique investment bank;
• Carolyn Byrd, chair and CEO of GlobalTech Financial;
• Jeannie Diefenderfer, an advisor who spent 28 years at Verizon;
• Kim Fennebresque, former chairwoman, president and CEO of Cowen Group;
• Carol Flaton, managing director at AlixPartners, a global consulting firm;
• Matthew Hart, former president and COO of Hilton Hotels;
• Fred Hochberg, former chairman and president of the Export-Import Bank of the U.S.;
• Jaco Katz, former chairman of Grant Thornton, a leading independent audit, tax and advisory firm;
• Nichelle Maynard-Elliott, who most recently served as executive director of mergers & acquisitions for Praxair; and
• Thomas Sabatino Jr., former executive vice president and general counsel of Aetna.

HP officials said its board would review the proposed Xerox nominees and respond “in due course.” The date of HP’s annual meeting has not yet been announced.
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Xerox secures $24 billion in funding commitments for HP takeover

Xerox Holdings Corp. on Monday said it had raised the $24 billion necessary for its proposed hostile takeover of HP Inc. The document company has received financial commitments from Citi, Mizuho and Bank of America.

In November, Xerox officials reached out to HP executives requesting due diligence surrounding a Nov. 5 proposition to acquire HP for $22 per share, which would comprise $17 in cash and 0.137 Xerox shares for each HP share. The proposal closely followed news that Fujifilm Holdings Corp. would buy out Xerox’s one-quarter share in Fuji Xerox Co. Ltd., a 52-year partnership that soured last year during a failed merger attempt.

HP turned down the offer, saying it “significantly undervalues HP and is not in the best interests of HP shareholders.” The computer company did, however, leave room for the possibility of its own acquisition of Xerox.

Had HP accepted the proposal its shareholders would have owned roughly 48 percent of the combined company. The offer represented a 20 percent premium to HP’s closing share price of $18.40 on Nov. 5.

In late November, Xerox said it would attempt a hostile bid by addressing HP shareholders directly, which it did in a 33-page presentation on Dec. 9. Among other things, Xerox Vice Chairman and CEO John Visentin said the value of the transaction “goes beyond economics.”

“In consolidating industries, first movers not only win but also have an opportunity to reshape the competitive landscape in an enduring way,” he wrote, noting that the cash flow generated by the deal would enable rapid de-leveraging and greater capital returns for shareholders.

In his Jan. 6 letter to HP leaders, Visentin said that dialogue with some of HP’s largest shareholders raised questions as to Xerox’s ability to raise the capital needed for the takeover, hence the financing commitments.

Last month, activist investor Carl Icahn—who led the charge against a Xerox and Fuji merger, eventually gaining control over Xerox’s new board—urged HP leaders and shareholders to take the deal with Xerox. Icahn in early November had purchased $1.2 billion in HP stock; bringing his total stake in the company to more than 4 percent; he also has a nearly 11 percent stake in Xerox.

Separately, a lawsuit filed last month against Icahn alleges he bought HP shares knowing that Xerox was considering buying the stock at a premium.

In December, Icahn told HP shareholders that the company’s refusal to entertain the acquisition proposal amounted to “little more than rearranging the deck chairs on the Titanic.”

Meanwhile, Fuji Xerox on Monday said it would end the technology agreement it had with Xerox when it expires March 31, 2021. At that time, the company’s name will change to FUJIFILM Business Innovation Corp.

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Xerox furthers hostile takeover bid in HP shareholder presentation

Xerox Holdings Corp. has launched its hostile takeover bid of Hewlett Packard Inc., beginning with an investor presentation made available to HP shareholders on Monday.

“There is a clear path to realizing increased value from your investment in HP—the proposed transaction with Xerox,” Xerox Vice Chairman and CEO John Visentin wrote in the 33-page presentation.

In November, Xerox officials reached out to HP executives requesting due diligence surrounding a proposition to acquire HP for $22 per share, which would comprise $17 in cash and 0.137 Xerox shares for each HP share. The proposal closely followed news that Fujifilm Holdings Corp. would buy out Xerox’s one-quarter share in Fuji Xerox, a 52-year partnership that soured last year during a failed merger attempt.

The $2.3 billion buyout gave Xerox the leverage it needed to pursue acquisitions, with Visentin telling one media outlet last month that the company was in “attack mode.”

But HP answered Xerox’s proposal by saying it “significantly undervalues HP and is not in the best interests of HP shareholders.” Still, HP left the door open for a potential combination that would put the computer giant in the driver seat.

HP at the time said its board had considered the “highly conditional and uncertain nature” of the proposal, including the impact of outsized debt levels on the combined company’s stock.

The two companies traded barbs, and on Nov. 24 Xerox said it would attempt a hostile bid by going straight to HP’s shareholders. HP officials noted Xerox’s declining revenue, perceived versus real synergies and a host of other issues that could affect company value.

In Monday’s shareholder presentation, Visentin said the value of the transaction “goes beyond economics.”

The presentation suggests cost savings for the combined company of roughly $2 billion in two years and projects $1 billion to $1.5 billion of potential growth opportunities. Xerox says the combined company would be worth roughly $31 per share.

Xerox officials are looking for three weeks of mutual due diligence on the offer.

Shares of company stock (NYSE: XRX) were down slightly at $37.31 midday Monday.

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Xerox, HP trade barbs as Xerox plans hostile bid

Hewlett Packard Inc. on Sunday shot back at Xerox Holdings Corp.’s Thursday letter threatening a hostile bid attempt by issuing its own strongly worded denunciation.

“It is clear in your aggressive words and actions that Xerox is intent on forcing a potential combination on opportunistic terms and without providing adequate information,” said HP CEO Enrique Lores and Chairman Chip Bergh in Sunday’s letter. “When we were in private discussions with you in August and September, we repeatedly raised our questions; you failed to address them and instead walked away, choosing to pursue a hostile approach rather than continue down a more productive path. But these fundamental issues have not gone away, and your now-public urgency to accelerate toward a deal, still without addressing these questions, only heightens our concern about your business and prospects.

“Accordingly, we must have due diligence to determine whether a Xerox combination has any merit,” they said.

Xerox last week had reiterated its proposal to acquire HP for $22 per share, which would comprise $17 in cash and 0.137 Xerox shares for each HP share. In the Nov. 21 letter, Xerox Vice Chairman and CEO John Visentin noted that HP’s financial adviser, Goldman Sachs & Co., had set a $14 price target with a “sell” rating for HP’s stock after the computer giant announced its restructuring plan in October.

Visentin said Xerox was willing to open its books to HP, but HP had yet to offer mutual due diligence.

“The Xerox board of directors is determined to expeditiously pursue our proposed acquisition of HP to completion—we see no cause for further delay. Accordingly, unless you and we agree on mutual confirmatory due diligence to support a friendly combination by 5 p.m. EST on Monday, Nov. 25, 2019, Xerox will take its compelling case to create superior value for our respective shareholders directly to your shareholders,” Visentin wrote in Thursday’s letter. “The overwhelming support our offer will receive from HP shareholders should resolve any further doubts you have regarding the wisdom of swiftly moving forward to complete the transaction.”

But on Sunday, HP said it was important to emphasize that the company was not dependent on a Xerox combination.

“We have great confidence in our strategy and the numerous opportunities available to HP to drive sustainable long-term value, including the deployment of our strong balance sheet for increased share repurchases of our significantly undervalued stock and for value-creating (mergers and acquisitions,)” Lores and Bergh wrote.

The letter also noted a number of concerns HP had over a possible acquisition:

• Xerox has missed consensus revenue estimates in four of the last five quarters;
• Xerox’s revenue has fallen from $10.2 billion to $9.2 billion (on a trailing 12-month basis) since June 2018, and this is expected to continue; Xerox management projects revenue declines of 6 percent in fiscal 2019;
• Given how much of your business is based on contractual revenue, we are concerned about the decline in customer total contract value in excess of revenue declines, which suggests your revenues may decline even faster in future years. We note that the TCV of enterprise signings (including renewals) in 2018 was down 13.9 percent in constant currency and your churn for 2018 was 18 percent, both data points which Xerox has stopped providing publicly since the end of 2018;
• Our review of synergies based on public information and the limited information you have shared does not support achievable synergies of the scale you suggest, and it appears that your assumptions include significant savings that are already included in each company’s independently announced cost reduction plans; and

• It appears to us that when Xerox exited the Fujifilm joint venture, Xerox essentially mortgaged its future for a short-term cash infusion. We fear that the exit has left a sizable strategic hole in Xerox’s portfolio. In addition, we have concerns as to the state of Xerox’s technology resources, research and development pipeline, future product programs, and supply continuity and capability. Finally, we note that Xerox will have to get access to the fastest-growing Asia Pacific region.

“The HP board of directors is committed to serving the best interests of HP shareholders, not Xerox and its shareholders,” the letter continued. “HP has numerous opportunities to create value for HP shareholders on a standalone basis. We will not let aggressive tactics or hostile gestures distract us from our responsibility to pursue the most value-creating path.”

Shares of Xerox stock (NYSE: XRX) has climbed to $39.06 since Visentin issued his letter last week.

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HP rejects Xerox takeover proposal, recognizes benefit of ‘potential combination’

Days after revealing that activist investor and Xerox Holdings Corp. majority shareholder Carl Icahn had purchased $1.2 billion in Hewlett Packard Inc. stock—a sign that the 83-year-old investor wholeheartedly backed a merger between the two companies—HP announced it had rejected Xerox’s unsolicited bid to acquire the Palo Alto, Calif.-based computer giant.

In a statement released Sunday, HP officials said the Nov. 5 proposal “significantly undervalues HP and is not in the best interests of HP shareholders,” but also left the door open for a potential combination that would put HP in the driver seat.

Xerox’s $33.5 billion proposal offered HP shareholders $22 per share, comprising $17 in cash and 0.137 Xerox shares for each HP share. HP shareholders would have owned roughly 48 percent of the combined company. The offer represented a 20 percent premium to HP’s closing share price of $18.40 on Nov. 5.

“A combination between us is supported by strong industrial logic given our respective strength in the A3 and A4 markets, complementary footprint, deep cultural fit and shared DNA of innovation,” Xerox officials wrote in the proposal. “It is difficult to conceive of a strategic alternative for either company that delivers superior value.”

Xerox pointed to cost synergies of “at least” $2 billion within 24 months, including $500 million by leveraging scale, supply chain and distribution footprint, and $1.5 billion from combining “world-class” R&D groups and streamlining corporate functions.

“Our board of directors strongly believes the industry is overdue for consolidation and that those who move first will have a distinct advantage in a secularly declining macro environment,” Xerox officials wrote in the proposal. “By combining R&D capabilities and financial resources, together we can accelerate the transformation of our businesses and take a leadership role in key growth markets such as 3D printing; digital packaging and labels; graphics; textile printing; workflow software; and IoT enabled services.”

But HP officials on Sunday said its board had considered the “highly conditional and uncertain nature” of the proposal, including the impact of outsized debt levels on the combined company’s stock.

“We recognize the potential benefits of consolidation, and we are open to exploring whether there is value to be created for HP shareholders through a potential combination with Xerox,” said HP President and CEO Enrique Lores and Chairman Chip Bergh in their letter to Xerox Sunday. “However, as we have previously shared in connection with our prior requests for diligence, we have fundamental questions that need to be addressed in our diligence of Xerox.”

Specifically, HP noted the decline of Xerox’s revenue from $10.2 billion to $9.2 billion since June 2018, “which raises significant questions for us regarding the trajectory of your business and future prospects.”

“We believe it is critical to engage in a rigorous analysis of the achievable synergies from a potential combination,” the letter states. “With substantive engagement from Xerox management and access to diligence information on Xerox, we believe that we can quickly evaluate the merits of a potential transaction.”

Xerox’s bid to acquire HP followed closely on the heels of an agreement to sell its one-quarter stake in Fuji Xerox to Fujifilm Holdings Corp. for $2.3 billion. Both companies’ boards agreed to the deal, which will give Fujifilm 100 percent ownership of the 57-year-old joint venture.

As part of the deal, Fuji agreed to withdraw its $1 billion breach of contract lawsuit against Xerox. Xerox Vice Chairman and CEO John Visentin on Nov. 5 said the company would use funds from the sale to pursue mergers and acquisitions in core and adjacent industries, return capital to shareholders and pay down its $550 million debt, which matures next month.

Shares of company stock (NYSE: XRX) closed Friday at $38.94 and were trading at around $38.79 midday Monday.

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Wilbern convicted of fatal Xerox credit union robbery

Richard Leon Wilbern arriving for a court date in 2017. (File photo)

A federal jury on Friday convicted Richard Leon Wilbern for the fatal robbery of the Xerox Federal Credit Union in Webster in 2003.

Wilbern, 59, fatally shot Raymond Batzel during the crime and wounded another customer, Joseph Doud.

The jury started deliberations Thursday and reached a verdict about 10:30 Friday morning. The trial started Oct. 2 before U.S. District Court Judge Charles J. Siragusa.

The mandatory sentence in the case is life in prison, according to Assistant U.S. Attorney Douglas Gregory, the lead prosecutor.

Wilbern went to the credit union the morning of Aug. 12, 2003, with a large brief case and an umbrella. He was wearing an FBI jacket, sunglasses, a United States Marshals badge and a wig.

He told an employee that he was there to conduct a security check, but soon pulled out two guns and told the employee to get cash.

Wilbern left behind the umbrella, which was subsequently tested and discovered to contain DNA that matched his.

In March 2016, investigators held a news conference to seek new leads in the case. Details of the crime and photographs of Wilbern committing the robbery were released.

On March 27, 2016, a person contacted the FBI naming Wilbern, a former Xerox employee, as the likely robber. The tipster, who worked at Xerox at the same time, said Wilbern had been fired from a job at Xerox before the robbery.

Wilbern worked for Xerox from September 1996 until Feb. 23, 2001, when he was fired. In August 2000 Wilbern filed a federal employment discrimination lawsuit against Xerox. That suit was ultimately dismissed in the company’s favor.

Wilbern stole more than $10,000 in the robbery.

Wilbern called the FBI five times between July 14, 2015, and April 14, 2016, claiming he was the victim of a real estate scam related to the impending foreclosure of property he owned on Hudson Avenue in Rochester.

FBI agents arranged for Wilbern to come to their office on Scottsville Road, supposedly to discuss his complaint. He signed some paperwork and was asked to put the paperwork in an envelope and seal it, which he did by licking the envelope. Agents were able to obtain a DNA sample from the envelope which matched the DNA on the umbrella, which the robber left at the credit union branch, according to the U.S. Attorney’s Office.

“In the end, I think the jury saw what was the most important thing, and that was that the DNA evidence in this case that we obtained from Mr. Wilbern conclusively matched the DNA that was left on the umbrella back in 2003. That evidence was the best piece of identification that we had in this case,” Gregory said at a news conference Friday afternoon.

There were witnesses who testified that surveillance camera images from the credit union showed Wilbern committing the robbery, but those pictures were grainy.

“But DNA sees through disguises. The DNA in this case sees through hazy images,” Gregory said.

Wilbern might have been charged with assault for shooting Doud, but the statute of limitations had lapsed for that crime, Gregory said.

Wilbern was previously convicted of a 1980 bank robbery in Irondequoit. He was caught and pleaded guilty to attempted second-degree robbery and served one year in jail, according to the U.S. Attorney’s Office.

Wilbern also was arrested in 1998 in Richmond, Va., and subsequently pleaded guilty to possession of a sawed-off shotgun and possession of a concealed weapon. He was sentenced to two years and 30 days in prison.

In January 2004 Wilbern was charged in St. Clairsville, Ohio, with receiving stolen property and

fictitious vehicle registration. He pleaded guilty to fictitious vehicle registration, authorities said.

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