Tag: xerox

Xerox faces shareholder lawsuits

Fuji XeroxIn the span of four weeks, Xerox Corp. has found itself the defendant in two separate lawsuits filed by one of its largest shareholders.

Darwin Deason, Xerox’s third-largest shareholder, has filed suit against Xerox, Xerox CEO Jeff Jacobson and Xerox’s board of directors to, among other things, allow Deason and other shareholders to nominate a full slate of directors for consideration and election at Xerox’s 2018 Annual Meeting. The complaint was filed on March 2 in the Supreme Court of the State of New York, New York County.

The complaint notes that for the upcoming 2018 annual meeting of stockholders, the time to provide advance notice expired on Dec. 11, 2017. Deason’s suit also notes that more than six weeks later, Xerox and its board made a series of “very significant decisions and disclosures that were highly material to Plaintiff’s (and likely other Xerox shareholders’) decisions concerning potential nomination of directors.”

Those decisions include the following, Deason contends:
• approving a dramatically one-sided sale of 50.1 percent of Xerox to Fujifilm Holdings Corp. for virtually no control premium and entrenching themselves with board and executive positions with the new entity post-closing;
• disclosing for the first time the existence of a deal-restrictive “crown-jewel” lock-up right in favor of Fuji under joint venture agreements with Fuji and that such lock-up curtailed Xerox’s ability to pursue strategic alternatives with any entity other than Fuji; and
• disclosing for the first time that, in connection with Xerox’s change of control transaction with Fuji, defendant agreed to make Fuji’s crown jewel lock-up rights permanent going forward.

The complaint alleges that the decisions made by the board “dramatically change the circumstances of the company’s prospects, and were unknown to Xerox’s stockholders, including plaintiff, prior to the Dec. 11, 2017 advance notice bylaw deadline. These new facts also highlight that Xerox is at a crossroad and the Xerox board faces imminent and critical decisions concerning the future of the company.”

Deason contends that stockholders should be given an opportunity to “determine, in view of these changed circumstances, whether to elect a board that will reevaluate if the proposed change of control transaction with Fuji is in the best interest of Xerox’s stockholders and whether Xerox should take any action with respect to the deal-prohibitive crown jewel lock-up, including termination of such lock-up right—a legal right Xerox has at this time, but the current Xerox Board has inexplicably refused to pursue—so that the company can engage in a fair and transparent bidding process.”

On Feb. 26, Deason sent a letter to Xerox officials requesting that the Dec. 11 director nomination deadline be waived, a request that was denied, he contends. In the lawsuit, Deason said that without injunctive relief, he and all other Xerox shareholders will be “irreparably harmed.”

“Indeed, Plaintiff and all Xerox shareholders will be deprived of their most fundamental corporate right—the right to exercise their franchise and have a voice in the future direction of the company,” the suit reads.

Deason and Xerox’s largest shareholder, Carl Icahn, have called for Jacobson’s termination from his position since rumors of the Xerox/Fuji deal began to surface in January. Icahn and Deason have been quite vocal with their discontent.

Icahn has been buying and selling shares since early last month. Icahn sold more than 1.2 million shares in early February, according to Securities and Exchange Commission documents. A week later, he purchased 15.3 million shares.

In the earlier lawsuit filed Feb. 13, Deason was seeking to enjoin the transaction, terminate the Xerox/Fuji joint venture lock-up and joint venture agreements and pursue strategic alternatives for Xerox.

“After having considered all strategic alternatives available to the company, Xerox’s board of directors remains steadfast in its belief that the combination with Fuji Xerox is the best path to create value for the company and its shareholders. It is unfortunate that Mr. Deason is seeking to interfere with Xerox shareholders’ right to decide and is relying on meritless legal claims,” Xerox officials said in a statement at the time. “Xerox has fully disclosed the joint venture agreements, and the company will respond to Mr. Deason’s legal claims through the appropriate legal channels in due course.”

When Fuji and Xerox announced the $6.1 billion deal Jan. 31, it was noted that the merger would give Fujifilm 50.1 percent ownership of the combined company, to be known as Fuji Xerox. Xerox shareholders will receive a $2.5 billion special cash dividend, or roughly $9.80 per share, funded from the combined company’s balance sheet, and will own 49.9 percent of the company.

Fujifilm, following the merger announcement, said it would slash 10,000 jobs globally at the Fuji Xerox subsidiary, which last year employed more than 45,000 people.

Shares of Xerox stock (Nasdaq: XRX) were down slightly at $30.08 in midday trading Friday. The document company’s 52-week range is $26.64 to $37.42.

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Shareholder sues Xerox over deal with Fuji

Fuji XeroxThe gloves are off.

Darwin Deason, Xerox Corp.’s third-largest shareholder, has filed a lawsuit against Fujifilm Holdings Corp.; Xerox; current Xerox board members; and Ursula Burns, Xerox’s former chairman and CEO. The complaint was filed Feb. 13 in the Supreme Court of the State of New York, New York County.

In the complaint, Deason alleges the following:

  • The Xerox/Fuji transaction is the result of an improper and fraudulently concealed “crown jewel” lock-up agreement that Xerox entered into with Fuji 17 years ago, that was never disclosed to Xerox’s shareholders before the signing of the Xerox/Fuji transaction;
  • The “crown jewel” lock-up agreement precludes a transparent and fair process for the potential sale of Xerox;
  • Despite its duty to do so, Xerox’s board fraudulently never disclosed the “crown jewel” lock-up;
  • Fuji and Fuji Xerox participated in a “WorldCom”-like accounting scandal that was uncovered in 2017 and gave Xerox the right to terminate the crown jewel lock-up provision, but the Xerox Board failed to terminate the provision;
  • Xerox publicly admitted that the lock up “limit[ed] Xerox’s strategic flexibility,” which caused the Xerox board to sell 50.1 percent of Xerox to Fuji;
  • Xerox/Fuji deal is extremely off-market:
    – No control premium for Xerox shareholders
    – 50.1 percent/49.9 percent Fuji control
    – Xerox CEO and board members retain jobs
    – No Xerox market check or sale process
    – Xerox share price has declined 2.4 percent since the unaffected date (Jan. 10) to Friday’s close (date prior to issuance of Icahn/Deason letter); and
  • Deason seeks to enjoin the transaction, terminate the Xerox/Fuji joint venture lock-up and joint venture agreements and pursue strategic alternatives for Xerox.

For its part, Xerox officials said Deason’s allegations are without merit and the company will vigorously defend itself.

“After having considered all strategic alternatives available to the company, Xerox’s board of directors remains steadfast in its belief that the combination with Fuji Xerox is the best path to create value for the company and its shareholders. It is unfortunate that Mr. Deason is seeking to interfere with Xerox shareholders’ right to decide and is relying on meritless legal claims,” company officials said in a statement. “Xerox has fully disclosed the joint venture agreements, and the company will respond to Mr. Deason’s legal claims through the appropriate legal channels in due course.”

Xerox —on the heels of Monday’s open letter from shareholders Deason and Carl Icahn—is calling many of the Icahn/Deason letter’s statements “misleading” and “inaccurate.” Xerox’s board has thus far declined to engage in a public debate, officials said Tuesday morning, but the letter “warrants a written response to ensure the facts are clear for all Xerox shareholders.”

In their letter, the two shareholders, who collectively own about 15 percent of Xerox’s shares, called to issue a deal between Xerox and Fujifilm in which “without putting up any cash, (Fuji) will receive (1) an additional, indirect 25 percent interest in a Fuji subsidiary that just last year disclosed a $360 million accounting scandal caused by a ‘culture of concealment’ and Fuji’s failure to have adequate management systems, and (2) a one-time special dividend financed with our own assets.”

When Fuji and Xerox announced the $6.1 billion deal Jan. 31, it was noted that the merger would give Fujifilm 50.1 percent ownership of the combined company, to be known as Fuji Xerox. Xerox shareholders will receive a $2.5 billion special cash dividend, or roughly $9.80 per share, funded from the combined company’s balance sheet, and will own 49.9 percent of the company.

Fujifilm, following the merger announcement, said it would slash 10,000 jobs globally at the Fuji Xerox subsidiary, which last year employed more than 45,000 people.

In its statement Tuesday, Xerox said the proposed combination of Xerox and Fuji Xerox followed a year-long review of value-enhancing alternatives available to the company. That review found that the proposed merger “delivers significantly more value to Xerox shareholders than would be achievable on a standalone basis.”

Icahn and Deason have asked shareholders to reject the deal, citing a number of issues. The two shareholders contend that the economics of the transaction disproportionately favor Fuji at Xerox shareholders’ expense.

“When we sketch out the financials of the deal, this is our conclusion,” Icahn and Deason wrote. “We—the existing Xerox shareholders—are selling approximately $535 million of normalized annual recurring cash flow for about $1.25 billion. In other words, we are selling control of Xerox for a cash flow multiple barely exceeding 2.3x.”

But Xerox in its statement called their math “suspect.”

“This analysis is just plain wrong,” Xerox officials wrote. “As discussed in prior presentations to investors, Xerox shareholders receive in the transaction a $2.5 billion dividend at closing; 49.9 percent of the combined Xerox and Fuji Xerox; and 49.9 percent of the benefit of the value created from at least $1.7 billion of annual cost savings, including $1.25 billion in cost synergies that are only achievable via this transaction.”

Icahn and Deason in their letter suggested “freeing the company from the shackles of the Fuji Xerox joint venture,” a strategy that Xerox officials say is not viable.

“The joint venture between Xerox and Fujifilm has existed in various forms since 1962,” Xerox officials note. “The current structure dates to 2001, when Fujifilm acquired additional shares in the joint venture to bring its ownership to 75 percent.”

The agreement is a binding legal document “that cannot be simply wished away, renegotiated or dissolved because Mr. Icahn and Mr. Deason desire it so.”

To Icahn and Deason’s claim that Xerox shareholders will become passive minority owners, with no opportunity to receive a control premium, Xerox officials said its board negotiated “strong minority protections,” including five independent Xerox designated directors to serve for five years.

Xerox also noted that Chief Executive Jeff Jacobson—whose firing Icahn and Deason have demanded for weeks—will represent one of the seven Fujifilm board designees and serve as CEO of the combined company.

The document company noted that while Icahn and Deason contend that the company’s revenue and margin have continued to decline in the last three years, its full-year 2017 results “clearly demonstrate that the strategy we have implemented is working as we met or exceeded every financial metric we guided to in 2017.”

“In conclusion, Mr. Icahn and Mr. Deason fail to provide an actionable plan or any cogent ideas to make their scheme a reality,” Xerox officials said in their statement. “Following their playbook would be both highly irresponsible and unlikely to succeed, particularly given the terms and constraints of the existing Fuji Xerox joint venture agreement, and the realities of today’s competitive environment.”

Icahn on Feb. 5 sold 140,011 shares of the company’s stock, at a total value of $4.55 million. The transaction was disclosed in a Securities and Exchange Commission filing last week. Shares of Xerox stock (Nasdaq: XRX) were down more than 2 percent to $29.25 in Tuesday morning trading.

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Icahn, Deason urge shareholders to kill Xerox merger with Fujifilm

Billionaire investors Carl Icahn and Darwin Deason on Monday said the pending merger of Xerox with Fujifilm will signal the death of the Rochester-founded company and are urging fellow shareholders to put the kibosh on the deal.

They also called the current Xerox board of directors “ostriches” whofujixerox have buried “their heads in the sand while the world slowly falls apart around them.”

“Unless we do something, this latest Fuji scheme will be the company’s final death knell,” Icahn and Deason wrote in a joint statement appearing on Icahn’s website. “We urge you—our fellow shareholders—do not let Fuji steal this company from us. There is still tremendous opportunity for us to realize value on our own if we bring in the right leadership.”

Xerox announced on Jan. 31 the merger with longtime partner Fujifilm for $6.1 billion. Fujifilm would have a 50.1 percent ownership share. In return, Xerox shareholders would receive $9.80 per share.

Icahn and Deason together own 15 percent of Xerox shares. In the blog, they wrote, “The transaction has a tortured, convoluted structure, but it was best summarized by Shigetaka Komori, Fuji’s Chairman and CEO, when he boasted to the Nikkei Asian Review that the “scheme will allow us to take control of Xerox without spending a penny.

“It is really a remarkable achievement by Fuji. Without putting up any cash, they will acquire majority control and ownership of a venerable American icon. In exchange, we—the existing Xerox shareholders—will receive:

  1. an additional, 25 percent interest in a Fuji subsidiary that just last year disclosed a $360 million accounting scandal caused by a ‘culture of concealment.’
  2. a one-time special dividend financed with our own assets.”

In an emailed statement, Xerox officials said a comprehensive review of strategic and financial alternatives conducted over many months by the independent members of the Xerox board of directors, in consultation with independent financial and legal advisers, considered several other options in detail. Advisers concluded that the combination with Fuji Xerox was the best path to create value for Xerox shareholders.

“The transaction provides shareholders with the opportunity to benefit from ownership in a combined company that has enhanced growth prospects and a stronger financial profile to support future value creation, as well as an immediate substantial dividend payment. Xerox remains committed to ensuring the actions it is taking prioritize the best interests of its shareholders, customers, employees and various other stakeholders around the world,” Xerox officials said in the statement.

In late January, Icahn and Deason called for the sale of Xerox and the ouster of CEO Jeff Jacobson. Just days later, the rumored merger with Fujifilm became official.

Icahn and Deason said there is still “enormous” value for Xerox shareholders that “does not involve selling control to Fuji without a premium.” Rather, they wrote, it entails breaking free from Fuji “and bringing in leadership with the vision and operational expertise to revive the company.”

They believe Xerox should move into software, security and services “while maintaining the existing dominant market share position by leveraging the company’s strong position in higher-end enterprise market.”

That is not possible, they wrote, if shareholders “allow this board of directors to cede control of our company to Fuji. Nor will it be possible if we simply vote the deal down and allow this board of directors to remain in control of Xerox. They have proven time and time again to be nothing more than ostriches burying their heads in the sand while the world slowly falls apart around them.”

You can find the joint statement by Icahn and Deason here.

Despite the pushback, Xerox shares (Nasdaq: XRX) were trading heavily Monday, closing the day at $29.95, up more than 1 percent from opening. The company’s 52-week range was $26.64 to $37.42.

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Xerox cites progress in 4th quarter report

fujixeroxFollowing its announcement of a merger agreement with Fujifilm Holdings Corp., Xerox Corp. on Wednesday reported a fourth-quarter earnings drop and roughly flat sales.

For the quarter ended Dec. 31, Xerox reported revenue of $2.75 billion, compared with $2.73 billion in the fourth quarter a year ago.

The company reported a net loss from continuing operations of $196 million, or 76 cents per diluted share, compared with income of $185 million, or 70 cents per share, in the same period a year ago.

Excluding special items, Xerox reported earnings of $1.04 in the quarter. Analysts polled by Zacks Investment Research had expected EPS of 94 cents.

“One year ago I told the market that to position Xerox for long-term success and deliver shareholder value, we would focus on the growth areas in our industry to improve our revenue trajectory while continuing with our strategic transformation initiatives to increase our profitability and margins,” Xerox CEO Jeff Jacobson said in a statement. “With positive results across all metrics, our fourth-quarter performance clearly demonstrates the progress we have made and enabled us to deliver on our commitments for the full-year.”

For fiscal 2017, Xerox reported total revenue of $10.3 billion, down nearly 5 percent from 2016. Adjusted EPS for the full year was  $3.48.

Xerox is expecting earnings of $2.30 to $2.50 per share in fiscal 2018, with adjusted earnings in the range of $3.50 to $3.70. The company expects revenue to decline 2 to 4 percent in 2018.

Xerox Wednesday announced a $6.1 billion agreement that will give Fujifilm 50.1 percent ownership of the combined company, to be known as Fuji Xerox. Xerox shareholders will receive a $2.5 billion special cash dividend, or roughly $9.80 per share, funded from the combined company’s balance sheet, and will own 49.9 percent of the company.

Fujifilm announced it would slash 10,000 Fuji Xerox jobs, or roughly 15 percent of the combined company’s workforce. It is unclear if the job cuts will affect Xerox’s nearly 4,000 local staffers, hundreds of whom are being relocated from the company’s former headquarters downtown to its Webster campus in the coming months.

Xerox shares (NYSE: XRX) skyrocketed to more than $35 Wednesday on news of the acquisition, but have since receded. At midday Thursday, shares were trading at around $33. More than 4 million shares traded hands yesterday.

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Xerox announces merger with Fujifilm

Fuji XeroxXerox Corp., long a regional icon and one-third of Rochester’s one-time Big Three employers, settled rumors on Wednesday by announcing that the document company has agreed to merge with longstanding partner Fujifilm Holdings Corp.

The $6.1 billion deal will give Fujifilm 50.1 percent ownership of the combined company, to be known as Fuji Xerox. Xerox shareholders will receive a $2.5 billion special cash dividend, or roughly $9.80 per share, funded from the combined company’s balance sheet, and will own 49.9 percent of the company.

The Xerox/Fujifilm partnership dates to 1962 when the two companies agreed to a 50/50 joint venture in order to develop, produce and sell xerographic and document-related products and services in the Asia-Pacific region. Fujifilm raised its stake in the company to 75 percent in 2001. Fuji Xerox Co. Ltd. is headquartered in Tokyo.

“Fujifilm and Xerox have fostered an exceptional partnership through our existing Fuji Xerox joint venture, and this transaction is a strategic evolution of our alliance. The Document Solutions business represents a significant part of Fujifilm’s portfolio, and the creation of the new Fuji Xerox allows us to more directly establish a leadership position in a fast-changing market,” said Shigetaka Komori, chairman and chief executive of Fujifilm, in a statement. “We believe Fujifilm’s track record of advancing technology in innovative imaging and information solutions—especially in inkjet, imaging, and AI areas—will be important components of the success of the new Fuji Xerox.”

Separately on Wednesday, Fujifilm announced it would slash 10,000 jobs globally at the Fuji Xerox subsidiary, which last year employed more than 45,000 people.

“The market environment surrounding the company’s subsidiary Fuji Xerox has grown increasingly severe,” Fujifilm said in a statement.

It is unclear if the job cuts will affect Xerox’s nearly 4,000 local staffers, hundreds of whom are being relocated from the company’s former headquarters downtown to its Webster campus in the coming months.

“It’s hard for me to imagine that those 10,000 jobs will come purely from the joint venture’s 45,000, and none from Xerox’s 34,000,” said Brighton Securities Chairman George Conboy. “If the combined concern will have 75,000 employees, I think it’s reasonable to expect the combined concern will see a 15 percent haircut in employment. It will not fall evenly on every location or every division. But to think that in Rochester we’re going to escape the knife, I think is unrealistic.

“This deal has managed to preserve jobs of senior management, while cutting loose a solid 15 percent of the company’s workforce,” Conboy added.

But Greater Rochester Chamber of Commerce President and CEO Bob Duffy said everything he had heard so far about the merger was positive.

“Combining the two is going to maximize the strengths of both,” Duffy said. “And while the recent move from downtown to Webster was not great for downtown office space occupancy, the great news is the jobs stayed here. And we want to do everything we can to keep those jobs here and growing.”

The new Fuji Xerox will have dual headquarters in Norwalk, Conn., and in Minato, Tokyo, with a presence in more than 180 countries. The combined company will go to market and maintain the iconic “Xerox” and “Fuji Xerox” brands within its respective operating regions.

“The proposed combination has compelling industrial logic and will unlock significant growth and productivity opportunities for the combined company, while delivering substantial value to Xerox shareholders,” Xerox CEO Jeff Jacobson said. “The new Fuji Xerox will be better positioned to compete in today’s environment with truly global scale, increased presence in fast-growing markets, and innovation capabilities to effectively meet our customers’ rapidly-evolving demands. In addition, the combined company’s strong financial profile will enable investments that support continued market leadership, while also providing opportunities for increasing capital returns over time.”

Duffy said he will work with Monroe County Executive Cheryl Dinolfo to advocate and support the local Xerox facility.

“We’re hoping with the combined R&D and technology expertise the company will grow strong,” Duffy said. “We don’t want to see job reductions here at all. We’d love to see jobs increase.”

For that to happen, he added, local business and community leaders must support the home-grown company.

“Rochester often has a tendency of lamenting when companies leave or reduce, but often not being there to help them when they’re in business,” Duffy explained. “If we ignore that then we really don’t have the right to complain when those jobs are reduced.”

Dinolfo said Xerox holds a special place in Rochester history.

“I am hopeful that the company’s future here remains strong,” she said. “I have contacted Xerox and Chamber of Commerce President Bob Duffy to learn more about this merger and to extend Monroe County’s assistance in whatever way necessary. Moving forward, the County will continue to monitor the situation closely and will be prepared to act in the event local jobs are impacted.”

Duffy also said he’d like to see Xerox move its U.S. headquarters back to Rochester.

“I’d love to see it all here at some point and I’ve not gotten a reaction from that yet, but I’ve talked to at least two CEOs in my memory making that pitch,” he said. “I will continue to make that pitch.”

Upon close of the transaction, Jacobson will serve as chief executive officer of the new Fuji Xerox.

The combined company’s Board of Directors will include 12 members, seven of whom will be appointed by the Fujifilm Board. Five independent directors will be appointed from the Xerox Board. Komori will serve as chairman of the board.

“The merger of the two companies into the joint venture isn’t a deal that’s coming from a place of strength,” Conboy said. “It’s a deal coming from a place where these companies are consolidating to deal with a market that has been at best flat over the last several years.”

Jacobson in recent weeks has come under fire as two of Xerox’s largest shareholders called for both his ousting and increased transparency.

“He is neither qualified nor capable of successfully running this company, let alone negotiating a major strategic transaction that will do more than save his own job,” said Carl Icahn and Darwin Deason in a joint statement last week.

The new Fuji Xerox deal comes less than a year after Fujifilm acknowledged improper accounting standards at the subsidiary, which resulted in a $341 million adjustment to six years’ net profits and the resignation of Fuji Xerox Chairman Tadahito Yamamoto.

“Today’s announcement follows a comprehensive review of our strategic and financial alternatives led by Xerox’s independent directors that began after the separation of Conduent in 2016,” Xerox Chairman Robert Keegan said in a statement. “Upon careful consideration of all alternatives available to the company, the board of directors concluded that this combination is clearly the best path to create value for our shareholders. An attractive, certain cash dividend, together with participation in the future success of the combined company, presents a compelling value equation for Xerox shareholders. We are excited to strengthen our longstanding relationship with Fujifilm as we enter the next phase of Xerox’s transformation journey.”

The combined company will drive sales of $18 billion, officials said, and is expected to deliver at least $1.7 billion in total annual cost savings by 2022, with roughly $1.2 billion of the total cost savings expected to be achieved by 2020.

The new company expects to incur approximately $1.4 billion in one-time integration and restructuring costs, mainly in the first three years. The deal is expected to close some time in the second half of 2018.

Shares of Xerox stock (NYSE: XRX) were trading up more than 7 percent at $35.13 in heavy morning trading.

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Xerox to move downtown staff to Webster

xerox logoXerox Corp. plans to relocate the remainder of its Xerox Square staff to the Webster campus over the next few months, officials said Friday.

Xerox has negotiated an early termination of its lease for the downtown Rochester facility and will transition several hundred of its 3,400 Monroe County employees to its Webster location by the middle of this year.

“With occupancy at Xerox Square at less than 50 percent, it makes economic sense to relocate employees to available space that we own in Webster,” Xerox CEO Jeff Jacobson said in a statement.

Xerox in 2013 sold the 30-story building to a group of investors including the late Laurence Glazer of Buckingham Properties—collectively known as 100 S. Clinton LLC—for $40 million. Xerox at that time agreed to an eight-year lease of the building for more than 1,000 staffers.

Xerox Square consists of the 30-story tower, a two-story annex and a four-story auditorium, with a total of 850,000 square feet of floor space. The land area is 2.7 acres.

The auditorium seats 700 people, and the Xerox Square location includes a two-story underground parking garage.

Ground was broken on June 28, 1965, and the building—which stands 444 feet above street level—was fully occupied by August 1968.

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Xerox shareholders call for change

xerox logoTwo of Xerox Corp.’s largest shareholders on Monday said they are joining forces to elect four new directors at the company’s 2018 annual meeting.

Last week, both Carl Icahn and Darwin Deason—who collectively own more than 40 million shares of the company’s common stock—called on Xerox to make public the terms of a deal hashed out decades ago with Fujifilm. Fuji Xerox Co. Ltd., a nearly 60-year-old joint venture that’s one-quarter owned by Xerox, accounts for nearly half of Fujifilm’s business.

The Wall Street Journal and other media have in recent weeks reported that Xerox was in talks on a deal with the Japanese camera maker that could include a change in control of Xerox. Xerox officials have thus far declined to comment on that potential deal, but Icahn and Deason have said publicly that Xerox should make that information, including the possible sale of the company, available to its shareholders.

In their joint statement, Icahn and Deason espoused a lack of faith in Xerox’s “old guard” directors and listed five demands, including the termination of Xerox chief executive Jeff Jacobson:

• In light of the recent accounting scandal at Fuji Xerox, the joint venture should be terminated or renegotiated to make it more favorable to Xerox;
• Xerox should immediately commence a process with new independent advisors to explore strategic alternatives;
• Xerox should immediately disclose the agreements governing the Fuji Xerox joint venture;
• CEO Jeff Jacobson, a member of the Xerox “old guard,” is incapable of creating long-term value for Xerox shareholders and should be replaced immediately; and
• If the “old guard” directors are unwilling to make the tough decisions necessary to prevent the Xerox ship from sinking, then they must be replaced as well.

“We implore the ‘old guard’ directors—who have historically lacked the intestinal fortitude to challenge and demand accountability from Xerox management—to not do us all the tremendous disservice of allowing Jeff Jacobson to lead the negotiations,” Icahn and Deason said in their statement. “He is neither qualified nor capable of successfully running this company, let alone negotiating a major strategic transaction that will do more than save his own job.”

Icahn and Deason added that each day the “old guard” remains in power is a waste of time that could erode the value of their investments.

“The Xerox board of directors and management are confident with the strategic direction in which the company is heading and we will continue to take action to achieve our common goal of creating value for all Xerox shareholders,” Xerox officials said in a statement.

Brighton Securities Corp. Chairman George Conboy said the document company has had problems with its topline for years and it’s appropriate that Xerox should look to do something to improve the company’s situation.

“If ‘something’ means replacing top management, I don’t think that’s a bad idea,” Conboy said. “You’ve got two guys who hold 16 percent (of company shares) saying ‘you guys aren’t doing your job,’ and you’ve got guys and gals who hold a tiny fraction saying ‘we’re doing our job just fine.’ Nonsense.”

Conboy also noted that current Xerox CEO Jacobson is a former Eastman Kodak Co. leader. Jacobson served as chief operating officer of Kodak’s $3.6 billion Graphic Communications Group., and also served for five years as CEO of Kodak Polychrome Graphics, a $1.7 billion joint venture between Kodak and Sun Chemical.

“The last five years he spent at Kodak were under the disastrous (Antonio) Perez regime. He left in ’07, halfway through Antonio Perez’s 10-year slog to bankruptcy,” Conboy said. “So I look at this and say, what did Carl Icahn say within the past year? One of the things he said was, if Xerox doesn’t make some changes, they’re going to end up like Kodak.

“Xerox is not Kodak, but it’s on a similar, if milder, curve of technological obsolescence, and it’s headed by one of the senior people who left only five years before Kodak crashed into bankruptcy,” Conboy added. “If I owned 16 percent and I saw the financial results that Xerox has been delivering over the last 10 years, I’d be looking to change management too.”

Conboy also said Icahn and Deason have a reasonable expectation to say they want a seat at the table when it comes to the Fujifilm talks and a possible change in control at Xerox.

“These are managers who don’t have the kind of personal, vested interest that Carl Icahn and Darwin Deason have. (Icahn and Deason) have a huge vested interest,” he added. “If you’re not growing the company, we’re going to end up in trouble. It’s not unreasonable for any owner to expect their managers to deliver or fall on their sword.”

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Xerox’s GIS buys office technology dealer in Carolinas

xerox-logoXerox Corp.’s Global Imaging Systems has acquired G-Five Inc., a Carolinas-based provider of office equipment and print services. It is GIS’ third office technology dealer purchase this year.

G-Five was founded in 1996 as an office supplies company and has facilities in Greenville, S.C., and Charlotte, N.C. Financial terms of the acquisition were not disclosed.

“The addition of G-Five expands Xerox’s footprint into new markets in the Carolinas, providing access to new customers and revenue streams,” said Michael Pietrunti, senior vice president, acquisitions for GIS. “The combination of Xerox technology and services in the hands of a very dynamic team of G-Five employees will deliver many new customer engagement opportunities.”

G-Five serves large metropolitan areas in the Carolinas, offering strong growth potential “in the $20 billion multi-brand reseller space,” officials said. The G-Five locations will become satellite sales offices to Carolina Office Systems, a GIS company, whose market includes Raleigh, Greensboro, Columbia and Charleston.

“We’re confident that GIS is the best decision for G-Five’s longtime customers as Xerox has always shown a commitment to small and midsize businesses like ours,” G-Five President Gary Gerack said.

GIS was acquired by Xerox in 2007 and is made up of regional core companies that sell and service document management systems such as printers, copiers and multifunction devices, network integration services and electronic presentation systems.

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Xerox third quarter mixed

xerox logoXerox Corp. on Thursday reported mixed quarterly results, with an increase in earnings despite a drop in third-quarter revenue.

For the quarter ended Sept. 30, Xerox posted net income of $179 million, down from $183 million in the year-ago quarter. Total revenue for the quarter was $2.497 billion, down from $2.629 billion in the third quarter last year.

The company’s third-quarter GAAP earnings per share rose to 67 cents from 66 cents a year ago. Adjusted EPS were up five cents to 89 cents in the quarter.

Analysts polled by Zacks Investment Research had expected adjusted earnings of 79 cents on revenue of $2.509 billion.

“We posted another solid quarter of earnings, margins and cash flow, in line with our expectations, supported by our ongoing strategic transformation initiatives,” Xerox CEO Jeff Jacobson said in a statement. “Revenue decline improved sequentially, which we expect to carry through the rest of the year.”

Jacobson noted that the company’s 29 new ConnectKey-enabled office products are now available and shipping globally.

“Momentum is building, as expected, entering the last quarter of the year,” he added.

Xerox adjusted its full-year guidance of GAAP EPS from continuing operations to $1.97 to $2.13, with adjusted earnings of $3.28 to $3.44.

Headquartered in Norwalk, Conn., the $11 billion document company has roughly 3,600 local staffers.

Shares of company stock (Nasdaq: XRX) were down more than 7 percent to $30.78 in morning trading.

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(c) 2017 Rochester Business Journal. To obtain permission to reprint this article, call 585-363-7269 or email [email protected]

Xerox, Mercury Print contribute to book project spotlighting modern workplace

Speaking of Work
Speaking of Work

Two area companies are involved in a collaboration that brought 14 award-winning writers and creative talents together for a book inspired by the modern workplace.

“Speaking of Work” was the brainchild of Xerox Corp. as part of its latest advertising campaign: Project: Set the Page Free. Xerox joined forces with the 92nd Street Y, a nonprofit cultural and community center located in New York City, for the one-of-a-kind project, which taps into the document services giant’s technology to help the contributors collaborate digitally on the book.

The purpose of the campaign is to underscore Xerox’s focus on innovating the culture of work, making transitions from the physical and digital world as easy as possible. The campaign leans heavily on digital, social and creative production.

Xerox tapped longtime local partner Mercury Print Productions to digitally print a small run of limited-release copies of the book. The printer will use the Xerox Nuvera 144 EA production system for the black and white book text and the Xerox iGen4 Press to develop the color cover pages.

Among the authors with chapters in the book are Lee Child, Roxane Gay and Joyce Carol Oates. A free eBook will be available for download at www.SetThePageFree.com.

Novelist Joyce Carol Oates is one of 14 creative minds contributing to Speaking of Work.
Novelist Joyce Carol Oates is one of 14 creative minds contributing to Speaking of Work.

“Project: Set the Page Free is a creative expression of the value Xerox has created since the company was founded—which started with helping people work, communicate and collaborate, and today transcends working freely between physical and digital worlds,” Xerox CEO Jeff Jacobson said in a statement.

92nd Street Y secured the lineup of authors and provided editing for the final book. The nonprofit has a global literacy outreach programs. A launch event for the e-book will take place in New York City Oct. 27.

As part of the project, Xerox is aiding global literacy through donations to 92 Street Y and Worldreader, a global nonprofit organization that champions digital reading in underserved communities.

Follow Velvet Spicer on Twitter: @Velvet_Spicer

(c) 2017 Rochester Business Journal. To obtain permission to reprint this article, call 585-363-7269 or email [email protected]

Xerox announces cash dividends

Xerox Corp. on Tuesday declared a quarterly cash dividend.

The quarterly cash dividend of 25 cents per share on Xerox common stock will be payable on Jan. 31, 2018, to shareholders of record on Dec. 29. The cash dividend was unchanged from the previous quarterly dividend.

Xerox’s board of directors also declared a quarter cash dividend of $20 per share on the outstanding Xerox Series B Convertible Perpetual preferred Stock. The dividend is payable on Jan. 1, 2018 to shareholders of record on Dec. 15.

Company stock (Nasdaq: XRX) Tuesday afternoon was down slightly at $32.68 per share.

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(c) 2017 Rochester Business Journal. To obtain permission to reprint this article, call 585-363-7269 or email [email protected]

Xerox lays off some local IT staff

xerox logoXerox Corp. eliminated 100 jobs this week, including an unspecified number in the company’s local operations.

“Xerox continues restructuring activities as identified through recent earnings announcements,” Xerox spokesman Bill Mckee said. “On Monday, members of the Xerox Information Management group and the finance group in Monroe County and other locations were told that a number of positions would be eliminated.”

The job cuts are part of the document company’s initiative to make Xerox more efficient and responsive to its markets, he said.

“Every decision is a difficult one and we understand the impact on individuals,” Mckee said, noting that other locations where layoffs have occurred include facilities in Wilsonville, Ore., and Lewisville, Texas.

Some jobs in the UK also may be impacted.

“These positions are primarily part of Xerox’s internal IT operations and include IT software engineers, systems engineers, program managers and associated support, as well as finance managers,” he said.

As part of its second-quarter financials reported in August, Xerox noted that the company expects to incur additional restructuring and related costs of roughly $35 million in the third quarter 2017 “for actions and initiatives that have not yet been finalized.”

Shares of Xerox stock (NYSE: XRX) were up slightly Wednesday afternoon from Tuesday’s close of $32.44.

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(c) 2017 Rochester Business Journal. To obtain permission to reprint this article, call 585-363-7269 or email [email protected]