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Xerox Acquires XL World

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Xerox Corp. (XRX - Free Report) recently announced that one of its fully owned subsidiaries, ACS, has acquired an Italian-based, multi-lingual customer care firm XL World.

The acquisition is expected to enhance the company’s European language services to support call center and business process operations. The acquired company will collaborate with Italy-based Innova Consulting and Netherlands-based Unamic/HCN to serve Xerox’s clients worldwide.

The new acquisition is a part of the company’s strategy to expand its footprint in the European countries, thereby enhancing its global capabilities particularly in the business process outsourcing (BPO) industry. The deal will improve ACS’ customer care services such as social media analytics, in-bound call center support, help desk services and back office processing capabilities to clients in the region. Last month, ACS also acquired certain assets of Innova Consulting with a similar intention.

Xerox has pursued a number of acquisitions in the current year, aimed at capitalizing on the growing markets (both domestic and foreign) in order to strengthen its financial performance in the upcoming quarters. Some important acquisitions include Xerographic Solutions, Education Sales and Marketing, LLC, Midwest Business Solutions Inc., Premier Office Equipment Inc., United Business Solutions, Florida Imaging & Network Systems and Bennett’s Business Systems, Inc.

In the last reported quarter, Xerox recorded an adjusted net income of $393 million or 27 cents per share compared with $342 million or 24 cents per share in the year-ago quarter. Revenues increased marginally by 2% year over year to $5.61 billion, driven by lower sales. The company expects to witness better performance going forward based on its attempt to grow and expand its business, particularly Business Process Outsourcing.

Consequently, Xerox has projected adjusted earnings in the range of $1.07 to $1.12 per share for full-year 2011. However, intensifying competition and availability of substitutes for the company’s products have put the company on the back foot.

Thus, the shares of Xerox Corp. are maintaining a Zacks #3 Rank, which translates into a recommendation of Hold for the short term (1 to 3 months) and we reiterate our recommendation of Neutral for the long term (more than 6 months).

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