Xerox’s new chief executive has pledged to “transform” the business in order to better serve customers and stakeholders, and has also stated that the group is not being actively offered for sale.
John Visentin, who became chief executive as part of the large-scale board changes at the business in May, made the statement as the group announced its second-quarter results.
He outlined his imperatives to drive sales, optimise and simplify Xerox’s operations, and re-energise innovation at the business.
The board has also authorised a $1bn (£761m) share buy-back programme and will repurchase up to $500m of shares this year. The firm said it planned to return at least 50% of its free cashflow to shareholders through dividends and share repurchases, “on an annual basis”.
“It’s clear after two months as CEO of this iconic brand that we can return Xerox to the forefront as a leading tech company,” Visentin stated. “We currently have software, services and printing technologies, along with a pipeline of innovations, which can disrupt the marketplace and bring increased value to those we serve.”
However, while Visentin pointed to the benefits Xerox gained from having a business model underpinned by annuity revenues, he also highlighted the challenges faced by the company.
“Our success will depend on operating with a relentless focus on optimisation. Actions include improving the effectiveness and efficiency of our supply chain and go-to-market channels. Equally important is ensuring we provide a great experience for our customers and address their evolving business needs,” he added.
Visentin also quashed talk of there being an auction process underway to sell Xerox, following the collapse of the takeover deal the previous board had agreed with Fujifilm. Xerox said there was no auction of the business.
“While there has been much speculation about Xerox, I want to be clear. My mission is to do what is right for Xerox. Our focus is on leveraging the assets and capabilities we have today to create a sustainable company that provides a compelling value proposition for customers and partners,” he said.
Xerox also reiterated its June announcement that it does not currently plan to renew its Technology Agreement with Fujifilm, which expires in 2021. “In addition, the company indicated that, upon expiration, it may sell products directly into the Asia-Pacific market with sole and exclusive use of the Xerox brand name,” Xerox stated. “Xerox's goal includes sourcing products, parts and supplies from the most competitive suppliers to support the needs of its customers.”
In the three months to 30 June Xerox posted total revenue of $2.51bn, down 2.2% or 4% lower on a constant currency basis. Within that, equipment sales slipped 0.9% to $561m, while post sale revenue (including services, maintenance, supplies and financing) was down 3.1% at $1.95bn.
In its high-end equipment sales business, which makes up 18% of equipment sales, there was a 9% fall in high-end colour device installations “as growth from our new Iridesse production press was offset by lower installs of iGen and lower-end production systems”, Xerox said. Sales of high-end black-and-white systems were down 12% reflecting the decline in that part of the market.
The group’s net income fell from $166m to $112m, and Xerox also filed an $58m charge for transaction costs related to the abandoned Fujifilm takeover deal, which is the subject of $1bn lawsuit from Fujifilm.
Xerox’s share price was up by 3.43% to $25.62 in early trading today.