Xerox (XRX) Stumbles on Earnings, Unclear Restructuring Plans
After a few too many disappointing quarters, Xerox (XRX) has finally recognized it needs to overhaul itself if it ever wants to thrive again.
The good news is, the company managed to top earnings estimates for its third fiscal quarter of 2015. When all was said and done, the profit of 24 cents per share topped estimates of only 23 cents per share of XRX. The bad news is, that's the only good news Xerox could offer shareholders. Revenues of $4.33 billion fell short of estimates for 4.54 billion, and came up even shorter of the year-ago top line of $5.12 billion. Xerox earned 26 cents per share in the same quarter a year earlier.
The once-iconic photocopier manufacturer has struggled in a world that relies increasingly less on printed documents and increasingly more on digital documents. With that paradigm shift only poised to worsen as time moves on, Xerox is now forced to consider some sort of restructuring if it wants to survive.
As CEO Ursula Burns explained:
“Although we already have taken steps to accelerate cost reductions and prioritize investments to drive improved productivity and higher margins, our board determined that undertaking a comprehensive review of structural options for the company’s portfolio is the right decision at this time.”
Though details of exactly what she meant were scant, one thing it doesn't mean is a sale of the company. Rather, any restructuring will likely focus on maximizing the value of its software and services business lines.
Although XRX shares exhibited some early strength on news that Xerox was finally to make necessary changes, all it took was a brush with the 100-day moving average line at $10.57 to spark a major pullback that has thus far turned into a bearish outside day bar. While the 20-day moving average line has thus far acted as a floor at $10.15, the bigger trend remains bearish.
XRX Daily Chart
