Business News
Xerox CEO to Investors: Industry Leadership, Annuity Business, Strong Financial Position Deliver Shareholder Value
Wednesday 05. May 2010 - Xerox Corporation (NYSE: XRX) is addressing how its annuity-based business, strong operating cash flow and industry-leading technology and services are differentiating Xerox and creating more value for shareholders.
Xerox is now the worlds leading enterprise for business process and document management. With the acquisition of Affiliated Computer Services, Inc. (ACS), which closed on Feb. 5, Xerox expanded its portfolio to include business process and IT outsourcing. The companys services business has doubled in size to $10 billion and Xeroxs annuity – or recurring revenue – is more than 80 percent of total revenue.
“Over the past few years, we have fundamentally changed our company. We prioritized investments in innovation to create the industrys broadest portfolio of document technology. We significantly scaled our services business to boost our annuity and expand our market opportunities. We increased our distribution channels to bring the Xerox brand to more businesses of all sizes. And, we maintained a disciplined and diligent approach to driving efficiencies across the enterprise,” said Ursula Burns, Xerox chief executive officer. “As a result, we are competitively advantaged to continue winning in the marketplace. And, we are well positioned to continue delivering solid revenue growth, earnings expansion and increased operating cash.”
During the conference, Xerox will outline its financial profile for the next three years. For 2010, the company expects pro-forma revenue growth of 1 to 3 percent. Full-year GAAP earnings are expected to be 37 to 47 cents per share. Xerox expects to deliver full-year adjusted earnings per share at the high end of the companys guidance of 75 to 85 cents per share. Cash from operations is expected to be $2.6 billion.
Xerox projects that, by 2011, full-year revenue will be approximately $24 billion, and is expected to grow to $25 billion in 2012. The company expects adjusted EPS to be 95 cents to $1.05 per share in 2011 and $1.10 to 1.20 per share in 2012.
Xerox is on track with revenue synergies from the ACS acquisition and cost-reduction activities. The company expects to deliver at least $100 million in profit synergies during year one, with upside potential to $150 million. By year three, Xerox expects profit synergies will ramp to more than $375 million.
Xerox will also update investors on strategic growth initiatives including:
Building Value Through Services – This month, Xerox will add mobile print capabilities to its market-leading Enterprise Print Services platform. Developed closely with customers such as Procter & Gamble Company, mobile print allows workers to print directly from their SmartPhones without downloading software, mapping to a printer or booting up a laptop.
In the first quarter, revenue from business process outsourcing grew 8 percent on a pro-forma basis. Now a Xerox company, ACS recently signed a ten-year, $1.6 billion contract to manage the state of Californias Medicaid Management Information System (MMIS). ACS will use Web-based applications and data analytics to improve healthcare provider administration for Californias Medicaid program. The online portal will allow providers to submit and check claims, determine beneficiary eligibility, enroll in pharmacy programs, prevent fraud and generate referrals for patients.
Accelerating Color Transition – Xerox color devices print the highest volume of pages in the industry. Color printing grew 11 percent in the first quarter of 2010. Adding to the worlds strongest color printing portfolio, Xerox introduced 17 new color products in 2009 including the ColorQube 9200 Series solid ink multifunction printer. CityCenter, an urban metropolis of hotels and residences, dining and shopping on the Las Vegas Strip, recently installed 37 ColorQube 9200s to meet sustainability goals. ColorQubes generate 90 percent less supplies waste and 10 percent fewer greenhouse gases, and use 9 percent less lifecycle energy than comparable laser printers.
Advancing Customized Digital Printing – Industry forecasts show digital color page volume in North America accelerating. That growth is illustrated through Cathedral Corporations use of Xeroxs 980 Color Continuous Feed System to address increased demand for personalized direct mail pieces. In addition, Xerox recently announced its Color 800/1000 Presses, an advanced system for the production of full-color personalized sales collateral, direct-marketing pieces and photo products.
Expanding Distribution – Since its 2007 acquisition of Global Imaging Systems, a large U.S. reseller of document technology, Xerox has continued to expand its distribution through multiple sales channels. Xerox has acquired 10 additional U.S.-based dealers and two European distributors. By broadening its technology to include more entry-level printers and multifunction systems and expanding its channels of distribution, Xerox significantly increased its presence in the small and mid-size business market, helping to fuel a 17 percent increase in total equipment installs during the first quarter of 2010.