Analysts say Xerox will cut at least 2,500 jobs

No. 1 copier maker could take a charge of up to $700 million

Office services

March 28, 2000|By BLOOMBERG NEWS

STAMFORD, Conn. -- Xerox Corp., the world's No. 1 copier company, plans to announce this week that it will cut at least 2,500 jobs to reduce costs and take a pretax, first-quarter charge of as much as $700 million, analysts said yesterday.

The company is likely to cut between 2,500 and 5,000 jobs, analysts said. Xerox has said the cuts will be fewer than the 10,000 eliminated in a 1998 restructuring program. The company is likely to contract out some manufacturing, notably for the housings of some printers and copiers, analysts said.

Xerox declined to comment, though it has said it plans a charge that is less than the $1.1 billion charge in 1998. Xerox's profit fell last year, hurt by a hasty reorganization of its sales force and billing centers, a rising U.S. dollar and greater competition. The Stamford, Conn. company's shares were battered as a result, falling 62 percent in 1999.

"Clearly, the company had some problems last year and this is something to get them back on track," said Goldman Sachs analyst Jack Kelly, who has a "market performer" rating on Xerox. "This one to me has a more defensive flavor [than the 1998 cuts]."

Xerox began reorganizing its sales force a year ago along industry lines instead of geographic boundaries. The change was meant to sell copiers, software and consulting services as a package, which the company said will generate half its revenue in the next decade.

The shares, up 19 percent this year, rose 12.5 cents yesterday to close at $26.9375 in New York Stock Exchange trading.

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