The words Xerox and copier are almost interchangeable – but not for the smaller personal copiers anymore.
Xerox is discontinuing both its personal copier and its desktop inkjet printer operations, eliminating some 1,500 jobs in the process.
The drastic moves will add 10 cents a share to earnings in the second half, Xerox President Anne Mulcahy said on the company’s Webcast. And it will also help the company cut $1 billion in costs by year’s end.
Specific pre-tax charges associated with this move will be announced with the company’s second-quarter results.
“It’s a small development but an important one,” said Greg Smith, securities analyst for H&R Block Financial Advisors. “To cut off that cash stream and lay off people, they’re admitting that the competition was too heated.”
Xerox’s move shows it’s serious about reacting to problems. “They acknowledged it [the home copier business], stepped it up and cut it off,” Smith said. “It’s positive for them to focus on more of what they do well.”
Wendy I. Abramowitz, analyst at Argus Research, agreed: “It will save them some money – absolutely. It’s a more expensive business to be in. The businesses that are geared to the low end – for home use – are lower margin businesses.”