Xerox Slips, Erasing Early Gain

Xerox (NYSE: XRX) erased an early gain andtraded down to US$7.08, losing 24 cents, Thursday morning. The office-equipment makersaid that health care network VHA renewed a contract that will generate revenue ofmore than $93 million a year.

Agreements with VHA and its affiliates, Novation and the UniversityHealthSystem Consortium, will boost Xerox revenue by about $500 million overtheir five-year terms, Xerox said.

“This renewal is proof of VHA’s continuing confidence in Xerox as itsbusiness partner in offering services, solutions and products to amembership that represents nearly 30 percent of the not-for-profit health care industry nationwide,” said Mike MacDonald, president of Xerox North American Solutions Group.

The announcement is the second piece of good news for Xerox this week. OnTuesday, the company said that it sold part of itsstake in a joint venture with Japan’s Fuji Film back to Fuji, as part ofa plan to raise cash.

Xerox said that the sale, which gives it more than $1.3 billion in cash, means ithas raised almost $2 billion through asset sales since December. In October,the company announced a plan to sell $2 billion to $4 billion in assets, cutcosts by more than $1 billion, and focus on its core document services andprinting businesses.

“We have not only delivered on a key element of our asset sale strategy, butalso reached a major milestone in restoring our financial strength,” Xerox chairman and chief executive officer Paul Allairesaid Tuesday. “Our cost-reduction efforts are being aggressively implementedand remain on target to achieve the desired results.”

Xerox said that it expects an aftertax gain of about $310 million on the sale ofits Fuji Xerox stake, expected to close by the end of this month.

In December, Xerox completed the sale of Xerox (China) Ltd. andXerox (Hong Kong) Ltd. to Fuji Xerox for $550 million in cash.

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