Xerox’s Horrible Management Finally Crushes the Company

By Douglas A. McIntyre Updated Jan 13, 2:23PM EST · Published Jan 29, 6:59AM EST

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Xerox’s Horrible Management Finally Crushes the Company — © Thinkstock

A number of press reports claim that Xerox Corp. (NYSE: XRX) will be broken into two pieces, and that activist investor Carl Icahn, who has taken a significant position in the company’s shares, will receive several board seats. The action is the culmination of several years of falling sales and profits, as well as a collapsed share price, all under the management of CEO Ursula Burns. Appropriately, she may have no role in either of the new corporations at all.

Icahn’s plan apparently is to tear apart Burns’s signature decision. Xerox bought Affiliated Computer Services (ACS) in 2009 for $6.4 billion in cash and stock. Her theory was that Xerox needed to diversify beyond its copier and related hardware businesses. The addition of software and services would increase margins. But the deal never worked.

The ACS purchase pushed total Xerox revenue from $15.2 billion in 2009 to $22.6 billion in 2011. Net income rose from $485 million to $1.3 billion over the same period. By contrast, in the most recent trailing 12 months, Xerox revenue has been $18.4 billion. Net income has dropped to $391 million. These recent results have been so poor that Xerox shares have fallen 30% in the past year.

When Xerox announced results for its most recently reported quarter, revenue had dropped 10% to $4.3 billion. Net income dropped from a profit of $266 million to a loss of $34 million. Services revenue fell 8% to $2.3 billion and yielded a loss. The ACS buyout has dragged down the company’s numbers.

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Burns made her usual set of excuses when the numbers were announced:

During the third quarter, the company achieved adjusted earnings in line with our guidance. We continue to focus on strengthening our offering portfolio, improving productivity and targeting our highest-margin segments. We remain focused on serving our clients and leading in the most attractive market segments where we are best positioned to compete and differentiate.

Icahn seems not to believe this. Burns has been CEO since July 2009 and has made tens of millions of dollars. She may well be on her way out.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.