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After announcing its fifth consecutive loss making quarter last month, Xerox now says it expects to return to full year profitability in 2002.
The company's chief executive Anne Mulcahy predicted a return to full-year profitability in 2002 at an investors' meeting on Monday. Despite major losses in 2001 and a number of significant cost cutting measures including the loss of 13,000 jobs, Xerox now says it will cut an additional USD200 million costs in an effort to return to a positive cash flow position.
Furthermore, Mulcahy said she is optimistic that the company will break its streak of loss making quarters in the final quarter of 2001. The company did not say what the new cost cutting measures will be but it did announce on Monday other moves demonstrating its retreat from the financing business. The exit from this business will see the company whittle down its USD13.6 billion in debt.
In its latest deal, Xerox said GE Capital would provide it with USD800 million in cash in return for receivables in Canada and the UK. In Canada, GE Capital also will become the primary source of equipment financing through a venture owned by GE Capital, in a deal which makes GE Capital the main source of credit for buyers of Xerox goods and is similar to an agreement the two firms have in the US. Analysts estimate that an exit from the financing business will eventually cut the firm's debt by as much as USD10 billion.
"We are focused like a laser on restoring our financial strength to pursue growth opportunities now and in the future," Mulcahy said. "I'm 100 percent confident in this company's ability to return to financial health and build a growth trajectory."
Mulcahy, addressing analysts in New York, also reiterated that she was "cautiously optimistic" the document company will turn a fourth-quarter profit. The company said revenue will be flat next year and increase slowly to between five percent and six percent by 2005. Currently Xerox is on track to hit around USD16 billion in revenues for the full year, down over USD2.5 billion from 2000.
The company has been under the weight of crushing debt in the last 18 months and in a number of moves to cope with slumping sales Xerox has implemented a restructuring program that cut USD1 billion in costs. Much of this was done through job cuts worldwide, including 450 in Ireland when the firm closed its SOHO (small home and office) business in Dundalk.
In Ireland Xerox still employs 600 staff in its Dundalk office and an additional 1,500 customer service staff in Dublin. Worldwide, the company employs over 80,000 and can be found at http://www.xerox.com
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