Xerox Corp's Anne Mulcahy says her objectives were clear when named president and chief operating officer last year: restore investor confidence by returning the biggest copier company to profitability.
Chairman Paul Allaire tapped Mulcahy to oversee plans to sell as much as US$4 billion in assets and cut more than US$1 billion from expenses by the end of this year.
Xerox's shares tumbled 80 percent last year as sales declined for the first time since 1994 and the company found itself unable to borrow to finance daily operations. Xerox blamed many of the problems on former Chief Executive Rick Thoman's attempt to reorganize the company's 15,000-member sales force along product lines, rather than geographic regions.
"The difference between Anne and Rick isn't in the knowledge of the business, it's that he didn't have the people skills," Allaire said. "It comes down to effective implementation."
Allaire, who temporally reassumed the CEO duties when Thoman was ousted in May last year after 13 months, has promised that Xerox will make a profit in the second half of the year. Xerox was expected to report its fourth quarterly loss in a row yesterday.
"The thing to focus on is getting out of a tailspin," said David Giroux, an analyst with Baltimore-based T. Rowe Price Associates Inc, which owns shares of Xerox. "The name is tarnished."
The Xerox name became synonymous with copy making when the company virtually created the industry in the 1960s and almost developed a monopoly on sales of office copiers. The complacency that can come with market dominance probably caused Xerox's slow transition to digital from analog copying technology, giving competitors the opportunity to win sales, analysts said.
Last year was a turbulent one at Xerox. The company's shares tumbled 80 percent. Sales declined for the first time since 1994. Even worse, Xerox found itself unable to borrow to finance daily operations.
The result: The Xerox name that's synonymous with copy making has become tarnished.
The company's chairman blames problems on a former a CEO. But Anne Mulcahy, who was brought in as president and chief operating officer last year, promises change.
"We've had a very compelling goal -- save Xerox," Mulcahy says.
"They had the technical and financial ability to do it and didn't," said Domenick Fumai, a fixed-income analyst with BNP Paribas Inc. "They thought the name was enough."
The 48-year-old Mulcahy is moving quickly to implement changes, saying Xerox was ahead of schedule on its year-end goals.
The company has cut more than US$500 million in costs, fired about 4,300 workers, stopped paying a dividend and sold half its stake in a venture with Fuji Photo Film Inc and other assets.
"They're buying time to get their house in order," said T. Rowe Price's Giroux.
Xerox's shares rebounded 76 percent this year, making it the seventh biggest gainer in the Standard & Poor's 500 Index. The stock fell US$0.07 to US$8.13 Tuesday. Xerox traded at about US$63 in May 1999, a month after Thoman became chief executive.
Mulcahy has taken over the reorganization of Xerox's sales force management and other administration positions to improve customer contacts. The company has also raised incentives for the sales force to stop deflections.
Xerox paid Mulcahy, a 25-year company veteran, a base salary of about US$721,000 and a bonus of US$45,000 last year. Allaire received cash and stock compensation valued at US$4.1 million.
Many investors and analysts remain skeptical that Stamford, Connecticut-based Xerox will be able to stem the loss of sales to rivals such as Heidelberger Druckmaschinen AG and Canon Inc.
Xerox's total US market share for color and black and white copiers fell to 25 percent last year from 30 percent, said Barry Tepper, an industry analyst at CAP Ventures. In color copying, Xerox increased its US market share by 1 percentage point to 30 percent last year, while Canon gained 2 percentage points to end the year with 32 percent of color sales, he said.
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