With most of its turnaround targets already achieved in 2001, Xerox Corporation will reassert its focus in 2002 on building impenetrable office, production and services businesses that will drive sustainable profitability - while continuing to execute operational improvements.
Speaking at the company`s 2001 Investor Conference here, Xerox President and Chief Executive Officer Anne Mulcahy described how Xerox brings a hard-hitting, high-quality combination of technology, expertise and global reach to customers who need Xerox`s know-how to make their businesses work better.
At the same time, under previously announced agreements, the company will move forward with the disciplined transfer of its office manufacturing operations and equipment financing services to external partners.
"We are focused like a laser on restoring our financial strength to pursue growth opportunities now and in the future," Mulcahy said. "I`m 100 percent confident in this company`s ability to return to financial health and build a growth trajectory."
After summarising the company`s success in achieving its turnaround targets - such as selling $2.2 billion of assets and cutting $1 billion in costs - Mulcahy outlined the three operational priorities that will continue to advance the turnaround plan and position the company for full-year profitability in 2002:
. Ensure liquidity through transferring equipment financing to external partners, and renegotiating the company`s revolving credit agreement, for which discussions have already begun.
. Capture productivity savings and redefine the business model for the company`s developing markets group from a market share focus to a cash and profit focus.
. Invest in growth by strengthening the products and services businesses, broadening sales coverage and building the Xerox brand.
Mulcahy said that in addition to Xerox`s breakthrough high-speed production press, the DocuColor iGen3, Xerox has four other new office and production platforms on the 2002 launch map, making 2002 "an exceptional year". In addition, "platforms provide families of products and technology that provide the best return on investment," she said.
Direct sales territories, already virtually full, will continue to focus on the high end of the market, but coverage through telebusiness, indirect channels and partners will significantly expand to efficiently reach more customers and capture more sales. Complementing all efforts is a new brand advertising campaign - the cornerstone of a renewed marketing emphasis - that will begin next quarter. In short, she said Xerox is making the right investments to return to growth.
By 2005, Xerox expects to achieve annual revenue growth of 5% to 6%, higher gross margins at around 40%, and selling and administrative costs in the low 20% range - which will contribute to an operating margin of 11% to 12%.
Xerox`s go-to-market strategies will continue to be anchored by advanced imaging and document systems; solutions that tailor Xerox devices to solve customer problems or improve document-related work processes; and services that blend technology with document, content and knowledge management expertise.
All are delivered through Xerox`s three powerful, market-focused businesses designed to grow revenue in the office, production and services segments. In the office market, for example, Xerox is regaining its leadership by leading a migration to colour technology through its expanding DocuColor and Phaser lines, delivered at benchmark costs and through more channels.
"Our passion is working with customers to help make them successful," Mulcahy said. "These three opportunities makes us better positioned to deliver that value to customers better than any other company in this space."
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