Xerox continues to face a difficult environment, marked by falling equipment sales and a downward revision of its outlook. The end of production of the iGen5 and Nuvera presses, deemed unprofitable, illustrates this repositioning. However, the changes underway are accompanied by a net loss of $1.2 billion, a sign of the financial and operational challenges that remain.
Production of the iGen5 and Nuvera digital presses has been discontinued by Xerox, which considers the equipment unprofitable. This decision marks a milestone in the transformation of the company, once a pioneer in digital printing. Pressures linked to increased competitiveness and falling margins on printing equipment led Xerox to make this drastic choice, accentuating the vulnerability of its traditional activities.
The third quarter of 2024 saw sales fall by 7.5% to $1.53 billion. In the main "Print & Other" business unit, sales fell to $1.46 billion. In addition, the company had to absorb an impairment charge of $1 billion, linked to the loss of value of its assets due to its weakened outlook. Despite a slight increase in adjusted operating margin to 5.2%, the net loss amounted to $1.2 billion, reflecting financial pressure and transitional difficulties.
Xerox's withdrawal from Drupa 2024 is another indicator of its refocusing. By avoiding this major event, Xerox seems to be demonstrating a desire to focus on areas other than traditional printing solutions, namely IT and digital services, sectors deemed more promising in terms of future growth. This absence is all the more noticeable in a sector where presence at Drupa is often strategic for maintaining relationships with key industry players.
To offset losses in the printing sector, Xerox has undertaken the acquisition of ITsavvy, a company specializing in IT services. The move is aimed at diversifying revenues into higher-growth segments. By integrating ITsavvy, Xerox hopes to meet the growing digital and IT solutions needs of its business customers, seeking to reposition its offering and reduce its dependence on printing equipment.
Xerox's stock market performance has followed a negative trend, with its share price falling by more than 50% since the start of 2024, reaching $8.02. As a result, the company has lowered its guidance for the year, anticipating a 10% drop in revenues in 2024, with adjusted operating margin stabilized at 5%. This drop in market confidence and the downward revisions highlight the challenges of the diversification strategy.
