Xerox makes official its split into two companies

January 31 23:12 2016

Xerox will separate into two companies, a $11 billion document technology company and a $7 billion business services company, the office equipment maker announced Friday. The transaction into two independent publicly-traded companies is expected to be complete by the end of the year. Xerox also announced a three-year restructuring program expected to save $2.4 billion. These “significant actions … define the next chapter of our company,” said Chairman and CEO Ursula Burns in a conference call Friday morning from Xerox’s headquarters in Norwalk, Conn.

Separating the current company into one devoted to printers and copiers and another focused on systems to handle corporate transactions and payments will allow each to execute their distinct strategies — and represent better investments separately than the current Xerox, she said. Billionaire investor Carl Icahn will have a continuing part to play in the separation. He will name three members to the board of the business services company and  can also select someone to observe and advise the search for a CEO of that company.  “We applaud Ursula Burns and Xerox’s Board of Directors for recognizing the importance of separating Xerox into two publicly-traded companies,”  Icahn said in a statement included in the announcement.

The move comes more than 70 years after the Rochester, N.Y.-based Haloid Co., the company that would eventually become Xerox, acquired the rights for xerography, or photocopying, from Chester Carlson. The company brought the Xerox 941 to market in 1959 and changed its name to Xerox two years later.

Xerox’s star rose in the Seventies as it battled IBM and Kodak for dominance in the copier business. Revenue in 1996 hit $17.4 billion, not far from last year’s revenue. But the company missed some opportunities that would come back to haunt it. Its own Palo Alto (Calif.) Research Center would develop what would become the personal computer, the PC desktop graphic interface and the Ethernet standard, but other innovators such as Apple’s Steve Jobs would make those mass market products.