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Xerox to split in two?

29 January 2016

Xerox plans to split into two separate public companies, one for equipment, the other providing Xerox' business services. The announcement is likely to accompany the imminent announcement of the last quarter's poor results.
 
The company has been particularly influenced by the "activist" investor Carl Icahn, who announced his acquisition of Xerox shares last year. He currently holds nearly 8% of Xerox shares and should also get three seats on the board of the services company after the split.
 
This division looks like a u-turn by Xerox, after the 2010 acquisition of business services company ACS (Affiliated Computer Services) for $5.6 billion and the stated intention of Xerox CEO Ursula Burns to realise strategic value in holding the two sides of the company together as a whole.   Revenue from business services represents 56% of total revenue for Xerox, and it's rising, but not enough to offset the decline in sales of equipment.
 
This news comes at a difficult time for the company, which is about to announce a fourth consecutive year of decline in sales and turnover.  It also comes in the context of the recent division of Hewlett Packard.

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