Xerox Corp will split into two companies, one holding its legacy printer operations and the other its business process outsourcing unit, it said on Friday, in a bid to be more nimble after years of trying to integrate the businesses.
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There has been speculation that investor Carl Icahn, who recently acquired over 8 percent of Xerox shares, had pushed for the split, but in an interview on CNBC today, Burns said that decision was made by the board and Icahn wasn’t part of that conversation.
“Xerox shares rose almost 6 percent to Dollars 9.78”.
The split, expected to be complete by the end of 2016, will deliver United States dollars 2.4 billion in savings over the next three years, Xerox said. Xerox generated $878 million in cash flow from operations during the fourth quarter and ended 2015 with a cash balance of $1.4 billion. Excluding certain items, the company had earnings of 32 cents a share, above the average analyst estimate of 28 cents on Thomson Reuters.
Xerox reported full-year revenue of $18 billion. This segment also provides business process outsourcing services in the healthcare, transportation, financial services, retail, and telecommunications areas; and document outsourcing services, including managed and centralized print services. Document Technology would have had about $11 billion in revenue.
“Happy to announce we reached an agreement with (Xerox) re: separation into two independent public companies”, he tweeted. Her theory was that Xerox needed to diversify beyond its copier and related hardware businesses. Last year, Xerox sold its IT outsourcing business to Atos SE for US$966 million. At that time, about 40 per cent of the company’s revenue came from providing the business process outsourcing and and IT services to government clients, which included servicing student loans for the US federal government.
Icahn has had considerable success with getting companies to spin off their fast-growing businesses.
In the past 12 months, Xerox Corp (XRX.N) shares fell by over 30 percent and it tried to turn itself around after focusing on its services and software even as the company’s customers slashed their printing costs, reports said.
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The company, which is now based in Norwalk, Conn., had a bruising year in 2015.
Xerox said it will conduct a comprehensive structural review preceding the split.
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The leadership and actual names of the two companies will be determined later.
