Xerox posts Q1 revenue rise, shifts focus to BPO

David Ward, San Diego
Thursday, April 26, 2012

Xerox saw its Q1 revenues rise slightly over the same period in 2011 to $5.5bn, while pre-tax profit declined 11% to $313m as the company continued its shift from a hardware/technology provider into enterprise services such as print outsourcing.

"We’re making a seismic shift in our business," Chairman/CEO Ursula Burns told analysts in a conference call early this week to discuss the results. "It's not just in how we operate, but also in what we do and for whom we do it, all driven by the diversity of our offerings. As a result, the Xerox brand is now in places you wouldn't expect and serving industries where our relevance extends way beyond printing."

Burns stressed that Xerox remains committed to technology, especially printing, noting: "Our printing business continues to benefit our bottom line and remains core to our business model. We are focusing investments on innovation that drives down the cost of color printing, and we're expanding distribution to extend our reach to small and midsized businesses.

"We made good progress in Q1 with installs of Xerox products up 7%. According to recent external market share reports, we remain the leader in equipment revenue share for the ninth straight quarter. In fact, we're taking share from competitors, strengthening our leadership position."

However, that was not enough to prevent Xerox Technology Division from reporting a 5% decline in revenue from the sale, supplies and servicing of hardware such as the iGen and CiPress digital presses.

Xerox cited the combination of a continued weak global economy, as well as its customers shifting more to managed print services instead of buying new equipment as reasons behind the decline.

Burns also cited the company’s role in simplifying the healthcare bureaucracy as well as benefitting from government looking to outsource many of their services as key indicators that Xerox service emphasis is beginning to pay off. Most of this business stems from the company’s $6.4bn acquisition of Affiliated Computer Services, now known as Xerox Services, back in 2010.

Revenue from the company’s business services arm grew 10% in Q1 and now represents 51% of total revenue, compared with technology’s 43%, with the rest of income coming from areas such as paper sales.

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