Xerox to split into two companies

Xerox Corp (NYSE:XRX) traded up 6.5% during mid-day trading on Friday after the company announced better than expected quarterly earnings, Marketbeat reports. “Hewlett-Packard chose to split in 2014”.

Investor Carl Icahn, who disclosed a stake in Xerox in November, will get three seats on the new business service company’s board.

Icahn has amassed a 9.12% stake in Xerox, making him the largest shareholder ahead of Vanguard.

Fourth-quarter operating margin of 9.2 percent was down 1.2 percentage points from the same quarter a year ago.

At this time, one thing that is known about the new business process outsourcing business is that billionaire investor/activist shareholder Carl Icahn will be exerting considerable influence over that organization’s direction. “Thus, the separation of the two businesses will enhance their competitive positions and create significant value creation opportunities”. The full-year 2016 adjusted earnings per share guidance is expected to be $1.10 to $1.20 per share.

Burns told Bloomberg TV she “took discussion off the table” about her future.

According to sources, a major part of the spinoff will include Affiliated Computer Services, an outsourcing company which was bought by Xerox in 2010 in a $6.4 billion deal.

The document technology company, which will make printers and copiers, will have annual revenue of Dollars 11 billion, while the business process outsourcing company will have USD 7 billion in revenue.

She may be right that seven years in business are like seven dog years: things change quickly. The split will allow focused support for Xerox business lines he works with, such as managed print and development of Xerox applications, all the way through to the top of the organization.

Even after announcing the strategic review in October, Ms. Burns stood by the structure of keeping its two units under the same roof.

“Today’s market realities require greater agility and flexibility, the ability to innovate and adapt technology to address clients’ fast-evolving needs, and a more focused and efficient approach to operations and capital allocation”, said the company, explaining the move.

Revenues from the Services segment, which include Document Outsourcing (DO) and Business Process Outsourcing (BPO), decreased 3% year over year to $2,638 million in the reported quarter.

“I’m very positive about it”, Justice said.

Icahn, who says he owns 42 million shares of AIG, has not yet publicly responded to the company’s new strategy, and he could still start a proxy battle.

The firm is focusing on software and services to offset the decline in traditional hardware such as office printers.

Separately, Xerox announced its Q4 and fiscal 2015 results.

“I applaud and respect Ursula Burns for doing what she believes shareholders want”, Icahn said via his Twitter account.