There is no other brand name connected as much to digital print as Xerox. Accordingly, there is considerable attention when an announcement is made that Xerox reorganises (again).
To be honest, Xerox reinvented itself a couple of times. More recently Xerox acquired ACS in 2010 to diversify into services. After some years of little growth and synergies between the two business units, Xerox spun off the service business in 2016 as Conduent. In 2018 a new leadership team under John Visentin was installed by “activist investors” Icahn and Dyson, after terminating the Fujifilm merger and the ensuing divorce from Fuji Xerox. 2019/2020 saw the failed bid for HP takeover. This was followed by donating the PARC research centre, selling off portions of the software business, shuttering the former Impika inkjet activities in France, and terminating the liquid metal 3D print project.
In 2023 Icahn announced to withdraw from Xerox, with the company to purchase Icahn’s shares at a price of $15.84 per share. The aggregate purchase price is approximately $542 million, which Xerox expects to fund with a new debt facility. Hence it was to be expected that the company is embarking on another round of cost-cutting.
The news came out just at the start of 2024. As the main news, Xerox is targeting another 15% workforce reduction in 2024, mentioned in the last sentence of the press release. Even after spinning off Conduent in 2016 this is not the most severe cut however and follows the general trend of cutting expenses to generate returns for the shareholders.
There are some more news in the reorganisation announcement.
For the Core Print Business, which should be office and production print, Xerox laid out three strategies. I am trying my best to translate the press release jargon into expected actions (the full release can be found here):
“Simplify our core products” = trim down the product portfolio
“Increase investment in a partner-enabled go-to-market model” = more reliance on dealers
“With partners, pursue strategic market share gains” = take on additional OEM products or resales agreements.
The outlook for the Global Business Services is similar: cutting costs and generate “operating leverage and investment capacity for our growth segments”.
Those are likely to be Xerox’s IT and Digital Services. The plan is a “greater organizational focus on Xerox’s emerging Digital Services and IT Services capabilities to accelerate revenue diversification toward markets with higher growth and profitability profiles”. And to further “Implement a new multi-segment organizational focus to drive internal alignment and incremental services penetration with existing and prospective clients.” – although I lack imagination on what that all might mean in real life.
Once a driving force in digital production print, many had hoped for new products and solutions from Xerox. This is getting increasingly unlikely – if they cannot be bought in from the outside. A case in point was the withdrawal from drupa 2024. If there is nothing new to be shown, it makes sense to save the expenses, especially if there is massive debt to repay. It is also understandable that Xerox reorganises again and is focussing more on the services business, as digital documents and workflows are still growing. Hopefully, this effort is on a better footing than the ACS venture. It is regrettable however that a company with such a standing in production print essentially stopped innovating in this area – although in this case, I like to be proven wrong with my predictions.