Xerox reported 4th quarter earnings Tuesday morning. But this is a different kind of report than the company has been releasing previously.
The difference is that this earnings report includes only the document technology side of the business. At the end of last year, Xerox split into two companies, with the other company called Conduent. It will focus on business services, and that company has not yet released 4th quarter numbers.
In terms of the company that retains the name Xerox, it saw earnings of $181 million, down 29 percent from a year ago, and adjusted earnings per share of 25 cents met expectations. Earnings were impacted by restructuring costs as well as the fact Xerox saw an asset sale in the previous year.
Sales of $2.7 billion were down five percent after currency fluctuations are taking into account.
“Our fourth quarter results demonstrate that we are realizing significant benefits from our Strategic Transformation program,” said Jeff Jacobson, Xerox chief executive officer. “We delivered strong margins that countered expected pressure on revenue.”
Jacobson also said that, “With the separation of Conduent now complete, we turn our full attention to delivering on our strategy, which includes pursuing the growing areas of the market. As the strategy begins to yield results, our revenue trajectory is expected to improve over time while we expand our margins and continue to generate strong cash flows.”
At Brighton Securities, Chairman George Conboy says getting those sales numbers up really is Job 1 for Xerox.
“This quarter was a little better than the previous quarter ,where sales were down 10 percent. But over time what Xerox needs to do is grow, and if they can’t grow, the stock market is going to view them more negatively than they already do." In terms of cost-cutting, Conboy said that, “The problem is that you can only cut costs so much, you need to grow sales. They’ve got good management, but they’re operating in a difficult market , but now that Xerox is an equipment and equipment services business only, they’ve got to really double down on trying to get that top line (sales) up."
Xerox spokesperson Carl Langsenkamp told WXXI News that the revenue drop was due partly to equipment sales and the timing of some product launches, but he says they have reason for optimism later this year.
“In this first quarter for 2017 Xerox is going to have the largest product launch in its history and we’re expecting to drive some revenue late this year into next year based on that product launch."
Worldwide employment for the company at the end of last year was approximately 37,700, down about 2,400 from the previous year.
Xerox did some more cost cutting during the last quarter, part of ongoing efforts at reducing expenses. After the split of the two companies, about 5,500 people in the Rochester area will work for Xerox, and about 300 to 400 for Conduent.
Xerox also revealed in the latest quarterly report that it spent $159 million as part of the costs associated with the split into two companies last year.