Resurgent Xerox invests in future

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November 12, 2006|By Andrew Leckey | Andrew Leckey,Tribune Media Services

Xerox Corp. is famous, but has a checkered past. It has run the cycle from powerful and innovative to outmoded several times. It has morphed from riches to financially troubled as well.

In the 1980s, I covered struggling International Harvester. Its chief executive, Archie McCardell, a previous Xerox president, was frequently blamed for slashing Xerox research and development in a cost-cutting move that improved earnings for a while.

But, critics said, those actions crippled Xerox because it ultimately lacked enough new products. McCardell was blamed for a dark period in which the world wondered if the corporate name synonymous with photocopying might vanish.

It later revived, but its Perils of Pauline existence persisted.

Most recently, Anne Mulcahy inherited a mess when named Xerox CEO in 2001. There was a Securities and Exchange Commission investigation over its accounting practices - ultimately resulting in a then-record $10 million penalty - and it had heavy debt.

Mulcahy cut staff and businesses, tightened finances, traveled to talk with customers and - importantly - helped launch many products.

Although it still must compete with high-tech Goliaths, Xerox is doing just fine now. It announced strong third-quarter earnings and rising output of color pages from printers and copiers. It has about $1.5 billion in cash to facilitate future acquisitions and offers a range of products such as digital presses and multifunctional devices.

I chatted with Mulcahy recently before she gave a speech and found that she was pleased that analysts liked her company better these days.

But she also felt that early in her tenure there was too much scrutiny of the company, primarily because she was a female CEO. She also felt analysts (and no doubt journalists) are partially to blame for the short-sightedness that has hurt Xerox and other firms.

"I answer questions about being a woman CEO because I do feel it is important," Mulcahy said. "But I also feel Xerox got more negative publicity than it would have in my early days on the job than it would have with a male CEO, and I feel that didn't serve Xerox well."

Short-term thinking, especially from a company expected to lead us into the technological future, also rankles her.

"I just don't think that quarterly earnings merit the kind of exaggerated attention that they receive," she said. "For example, I have four research centers focused only on long-term goals, yet I never have analysts ask me about any products that are more than 90 days out."

She believes the long-term future requires asking the big questions.

"How do we create flexible media that looks like paper but is more flexible?" she asked.

I'll get back to her on that one. But I left assured that Xerox doesn't intend to shortchange the future in this particular go-around.

Andrew Leckey writes for Tribune Media Services.

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