Xerox: no risk — no fun!

Ursula Burns presented today the Fourth-Quarter 2015 results first: Revenues declining, profit growth. At the end she used a single slide for breaking news: "Separation is the best path to enhance shareholder value".

The company plans to separate into two market-leading public companies following a structural review. The separation should be completed end of the year 2016. A strategic transformation program anticipated to deliver $2.4 billion in savings over next 3 years across both companies.

My take:

No risk, no fun. During the last 3 years Xerox was not able to speed up its premium business in graphic communications driven by high-level digital printing solutions.

Main reasons: wrong structure, wrong focus, serious management errors.  Specially in Europe. In Germany, Europe's biggest graphic communication market, Xerox became almost invisible. No presence, no leadership, no (more) success. — It is a shame!

We will see if Xerox is able to change the game via the split. Latest in summer during drupa 2016 as the world's biggest trade show for graphic communications Xerox has to demonstrate if its technologies are still relevant or not. 

Burns' out?

Right after the Friday's press conference there where rumors that Ursula Burns future as CEO is unclear, The Washington Post reported. 

Key facts provided by Xerox

Separate into Two Market-Leading Public Companies Following Completion of Comprehensive Structural Review

• Transaction to create $11 billion Document Technology company and $7 billion Business Process Outsourcing company in tax free structure
• Separation, expected to be complete by end of 2016, will maximize return to shareholders and align with current market dynamics
• Announces strategic transformation program anticipated to deliver $2.4 billion in savings over next 3 years across both companies

Fourth-Quarter 2015 Earnings Highlights

• Delivers GAAP EPS of 27 cents, adjusted EPS of 32 cents and sequential increase in operating margin to 9.2%
• Generates strong cash flow of $878 million in the quarter, $1.6 billion full-year
• Services segment delivers revenue of $2.6 billion and double-digit growth in signings in the quarter
• Announces full-year 2016 guidance of $0.66 to $0.76 in GAAP EPS and $1.10 to $1.20 in adjusted EPS

RECOMMENDED LINKS

Read as well the CNBC live report. 

The research company InfoTrends analysed Xerox with focus on the declining R&D spendings over the last 26 years. 

Xerox updated its announcement and shared some more detailed information via its Xerox Path Forward blog.