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Debt-ridden Xerox promises ‘aggressive turnaround’

Bluechip to pauper

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Xerox, the bluechip-to-pauper imaging business, is to tackle its $18bn debt through an "aggressive turnaround plan".

It says it will slash running costs by $1bn and will
will raise $2bn -$4bn through asset disposals. Enough to make employees dizzy - but is it enough to satisfy creditors and shareholders? And why did the board take so long to come up with a plan to "fundamentally resize" the company's asset base?

The spotlight fell on Xerox recently after it was revealed that the company had drawn down money from a $7bn credit line. Analysts blame a botched sales reorganisation for much of the company's present predicament.

A measure of Xerox's financial weakness is its intention, announced today, to withdraw from the equipment financing business. Lease financing is where companies such as GE Capital and IBM make hay, but obviously it needs a company with very deep pockets to compete successfully with the books.

Xerox also said today that it was "actively engaged in discussions to sell the company's China operations, a portion of the Xerox ownership in Fuji Xerox, Xerox Engineering Systems, and its interest in spin-off companies such as ContentGuard and Inxight".

Who's going to want Fuji Xerox - except Fuji?

Xerox's announced its plans to reorganise along with today's Q3 figures, which show an operational loss of $128m,and a net loss of $167m, compared with net income of $339 million for Q3, last year. The net loss contains a provision $55m to cover a bad debt related to its Mexico operation. Q3 sales were $4.5bn, four per cent down on the $4.63 billion recorded for the same perid last year. ®

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