Xerox reinvents itself. Again

Xerox has announced a restructuring plan that involves cutting back 15 percent of its workforce as well as streamlining the business divisions and some changes to the senior management. 

Actually, I think that it would be more accurate to say that Xerox has slightly fleshed out the vague suggestion that it floated alongside last year’s lacklustre Q3 figures that it would put together some kind of reinvention to improve operating income by $300 million by 2026.

So Steven Bandrowczak, chief executive officer at Xerox, set out three priorities for this ‘reinvention’. The first of these, the ‘Core print business’, involves simplifying the product line up and “increase investment in a partner-enabled go-to-market model” all of which sound more like vague aspirations then a carefully worked out business plan. Nonetheless, this suggests that Xerox is increasingly reliant on OEM arrangements with other printer manufacturers. So far this has mostly meant Fujifilm for its toner-based production printers but it’s likely that Xerox would look to work with other manufacturers as well. 

The next priority is listed as Global Business Services, which is not very well defined but seems to be an effort to achieve greater synergies within the business to improve overall efficiency. 

The third priority is to focus more on emerging digital services and IT services, which Bandrowczak characterised as “disciplined execution in revenue diversification.” This is really the key to this restructuring and suggests that Xerox mainly sees its future in supplying enterprise level managed IT services. 

That would probably be an easier sell if Xerox itself hadn’t fallen victim to a cybercrime incident, which The Register reported as being a ransomware attack. Xerox released a statement at the end of December to confirm that only its subsidiary, Xerox Business Solutions, had experienced an incident, noting: “We are actively working with third-party cybersecurity experts to conduct a thorough investigation into this incident and are taking necessary steps to further secure the XBS IT environment.”

Bandrowczak summed up the plan for reinvention: The shift to a business unit operating model is a continuation of our client-focused, balanced execution priorities and is designed to accelerate product and services, go-to-market, and corporate functions’ operating efficiencies across all geographies we serve.” 

There have been some changes to the management team with Joanne Collins Smee, executive vice president and president of Americas, and Tracey Koziol, executive vice president of Global Offering Solutions and chief product officer, both leaving. John Bruno, president and chief operating officer, is to lead the alignment between print and IT services, while Louie Pastor returns as chief transformation & administrative officer. Indeed other job titles in the management team include chief disruption officer and chief strategy officer, which would make more sense if Xerox was able to demonstrate any kind of upcoming disruptive technology, or even any kind of long term strategy.

Despite burying the drastic staff cuts in the last line of a press release, every news outlet covering this has led with the job losses. Xerox has not said which region or area of the business will be affected by the job losses, or how many people are involved other than vaguely noting: “Proposed reductions will be subject to formal consultation with local works councils and employee representative bodies where applicable.”

Normally this sort of announcement would lead to a rally in a company’s share price as investors hope the reduction in staff costs and restructuring will lead to greater efficiencies and more profit. However, Xerox’s share price fell sharply since making its initial statement on Wednesday 3 January from $18.03 to $15.69 though it closed Friday on $16.32.

Xerox has been on a bit of a rollercoaster ride since it split from Conduent in 2017. The last few years have seen the ill-fated effort to merge with Fujifilm, followed by the dramatic tussle with its shareholders that left Carl Icahn in pole position. Then there was the failed effort to buy HP before the pandemic and subsequent supply crisis shook everything up. Since then Xerox has bought out its largest shareholder, Carl Icahn, and sold off its 3D printing venture and even given away its PARC research centre. So it’s perhaps helpful to see this latest announcement as not so much a reinvention but more as Xerox being in a continual state of flux as it tries to figure out what its role actually is.

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