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Xerox heads back to profitability 
Tuesday, November 20 2001
by Matthew Clark


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