Xerox Corporation (XRX - Analyst Report) recently offered an overview of its long-term strategic plans to increase shareholder value through an optimum mix of margin expansion and growth in services, focus on vertical markets and innovative technology and services. The news boosted investor sentiment as the shares gained 4% to close at $10.69 on Nov 12.
The Key Initiatives
In order to better adapt to the evolving market trends, Xerox has continually realigned its business model by expanding indirect distribution channel and streamlining its supply chain and product portfolio. Going forward, the company expects to increase revenues from the Services segment to 66% of total revenue by 2017 from 56% at present.
To achieve this objective, Xerox is focusing more on vertical markets like healthcare. The company has already begun to reap huge benefits from Medicaid Management Information System (MMIS) through the successful implementation and CMS (Centers for Medicare and Medicaid Services) Certification in 31 state Medicaid programs.
In addition, proprietary software developed by its subsidiary PARC has gained wide acceptance in the industry to combat fraud, waste and abuse in healthcare applications. Xerox has also launched health insurance exchanges in Nevada, Kentucky and other states to further strengthen its position in the healthcare services market.
In tune with the increased demand for connectivity and mobility, Xerox is integrating its market-leading Managed Print Services (MPS) with its business process and IT outsourcing capabilities. MPS enables clients to gain visibility and control of printing to save money, improve productivity, boost environmental sustainability and document security. The integration will automate workflow with technology and consulting services to help clients meet the requirements of mobile workforce.
At the same time, Xerox is continuing its thrust for leadership in Document Technology with innovative products in order to meet the demands of customized communications in digital printing. These include waterless and inkjet-based solutions that enable print providers to deliver tailor-made services.
Xerox also provided its initial guidance for 2014 and reiterated its guidance for full year 2013. GAAP earnings for 2014 are expected to be in the range of 93 cents to 99 cents and adjusted earnings are expected between $1.10 and $1.16. The company expects operating cash flow to range from $1.8 billion to $2.0 billion in 2014.
Xerox increased its authorization for share repurchases by $500 million to bring the tally to approximately $1.5 billion. The company anticipates spending up to $500 million on acquisitions and $300 million on dividends in 2014.
Headquartered in Norwalk, CT, Xerox is a leader in the development, manufacture, marketing, servicing and financing of document equipment across the world. The company also provides extensive leading-edge document technology, services, software and genuine Xerox supplies for graphic communication and office printing environments of any size.
Xerox currently has a Zacks Rank #4 (Sell). Other players in the industry worth reckoning include FARO Technologies Inc. (FARO - Snapshot Report) , MKS Instruments, Inc. (MKSI - Analyst Report) and Mattson Technology Inc. , each carrying a Zacks Rank #2 (Buy).