STAMFORD, Conn.— Business machines giant Xerox Corp. said
today it was cutting 5,200 jobs, or 5 percent of its work force,
saying it can "no longer operate business as usual and expect to
win."
Struggling with stiff competition and a difficult reorganization
of its sales force, Xerox said it was narrowing its focus to two
core markets: business machines such as copiers for home and
medium-sized offices, and larger documents systems for big
corporations.
It plans to charge $625 million against earnings in the first
quarter as a result of the restructuring.
Xerox president Rick Thoman said the marketplace has changed
from the days when Xerox was a leader in photocopying technology.
"While these are difficult actions for our people, Xerox can no
longer operate business as usual and expect to win,'' he said.
"We're intensifying our drive to become a faster, leaner and more
flexible enterprise."
The cuts were not unexpected. Xerox said in January that an
overhaul was coming, and analysts this week had predicted job cuts
and a restructuring charge in the neighborhood of $500 million to
$900 million.
Today's announcement is Xerox's fourth major restructuring in
the last decade. In 1998, the company took a $1.1 billion charge
and cut about 9,000 jobs in another reorganization.
Xerox said none of the cuts in the latest overhaul will affect
its sales or research and development efforts. The charge includes
about $175 million for closing facilities and scrapping some of its
inventory.
The company said the cuts would affect all levels and geographic
areas. Details will need to be hashed out among business groups,
unions, government and local leadership, the company said.
"Over the past two years, we have made progress in improving
productivity and reducing general and administrative expenses. But
we need to go further," Thoman said.
The company's profits fell 52 percent in the fourth quarter, to
$294 million, or 41 cents per share, compared with $615 million, or
84 cents per share, a year earlier.
Revenues in the quarter fell 6 percent to $5.44 billion from
$5.79 billion a year ago.
The company has said it expects to see another decline in
earnings in the first quarter, which ends today.
Specific steps the company plans to take include:
- Streamlining production, including moving factories to areas
where certain products are most in demand.
- Consolidating warehouses and distribution centers and
eliminating backed-up inventory.
- Improved customer service.
- Combining support services for marketing, finance and human
resources.
- Improving Internet-based communications and support both
inside the company and for customers.
