I was going to be writing about my trip to the Square 9 Encompass conference this week, but I’m putting that off until next week with the latest news hitting the wires about Lexmark and Xerox.
I was just in Lexington for a press and analyst briefing (see my article below) and all seemed rosy. Then came the news late last week that revenues were down, jobs will be cut, and the Board of Directors is looking into various strategic options, including a possible sale. Talk about change. One day it’s this, the next day it’s that. Holy you know what.
Meanwhile a breaking story in Toner News on Monday of this week reported that Xerox Corp. will be launching a comprehensive review of its options, as the company posted its first quarterly loss since 2010 on a big charge.
According to the article, Xerox Chief Executive Ursula Burns said that the company has already taken steps to cut costs and improve productivity and margins, but that “undertaking a comprehensive review of structural options for the company’s portfolio is the right decision at this time.”
At this point, a sale of the company is not one of those options.
Xerox took a $385 million pretax charge as the result of interrupted government healthcare projects in California and Montana. The charge represents settlement costs among other impacts.
It’s not been a good year for Xerox with reports earlier this year that sales in its services division, which accounts for more than half of revenue, were down 8 percent to $2.4 billion. To make matters worse, its document technology business slipped 12 percent to $1.8 billion in revenue.
Those who closely monitor the financial performance of the players in the document imaging industry may not be surprised by either of these developments. Even for those of us who have been doing this for a long time, none of this should be all that shocking. If Lexmark gets snapped up by someone else, it’s not like we haven’t seen that happen before.
Based on my recent trip to Lexington and all the talk of transforming into a solutions company it seems that this is the type of transformation that takes time. Apparently, that’s incompatible with its Board of Directors and shareholders who don’t have the patience to wait for that transformation to fully take place. It’s also not like this is something that’s guaranteed to be successful.
In addition to all the predictions as to who may acquire Lexmark, and there’s been a few, there’s a feeling too that no buyer will step forward anytime soon. But if someone is looking for a solid solutions company with strong solutions portfolio and solutions strategy, Lexmark might be a good place to start.
As rapidly as things change, who knows, a deal may be ready to be announced by the time you’re done reading this…or not.
Thanks for reading.
