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Xerox cutting 9,000 jobs
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April 7, 1998: 11:45 a.m. ET
Copier maker sets $1 billion charge in major switch to digital technology
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NEW YORK (CNNfn) - Xerox Corp. said Tuesday it will cut 9,000 jobs, or 10 percent of its workforce, and take a second-quarter charge of $1 billion as it gears up for a shift to digital technology.
As part of a "worldwide" restructuring that involves 150 special projects, Xerox will rein in its U.S. parts depots, take a continent-wide approach to Europe, and close of one of its four U.S. customer service centers.
The job cuts, which had been expected, will come through voluntary reductions and layoffs.
The pink slips come to "The Document Company" less than a year after former IBM Corp. executive Richard Thoman, an avid cost-cutter, took over as Xerox's president.
Xerox's top executive said the moves will mean an injection to the company's bottom line as it boosts its reach into digital technology.
Although digital product lines are the fastest-growing businesses at Xerox, the company still gets more than half of its revenue from low-tech analog devices.
"This repositioning will strengthen us financially and enable strong cash generation,'' said Paul Allaire, Xerox's chairman and chief executive officer.
"These initiatives will underpin the consistent delivery of double-digit revenue growth and mid- to high-teens earnings-per-share growth," he said.
Investors apparently agreed with that assessment as Xerox shares (XRX) gained 2-1/2 at 110-5/8 in New York Stock Exchange trading Tuesday morning. [Click here for a graph of Xerox's stock performance over the past year.]
Those stock-price gains resulted in part from Xerox's announcement that the cuts, when fully implemented, will lead to pre-tax cost savings of about $1 billion annually. More than half of those savings initially will be reinvested in the company.
But the Stamford, Conn.-based copier maker said the spending cuts will be somewhat offset by lower gross margins as Xerox increases its business conducted through indirect sales channels and outsourcing.
Xerox is one of the world's top makers of fax machines, printers and copiers and it has laid out a strategy lately to get more competitive with rivals Hewlett Packard, Ricoh and Canon.
Xerox is expected to announce first-quarter earnings April 22. According to First Call late Monday, the consensus analysts estimate is for Xerox to earn 83 cents a share in its first quarter and $4.62 a share for the year.
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Xerox
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