Xerox’s Burns Looks to Europe, Latin America to Boost ACS Sales

Xerox Corp. (XRX), a year into integrating its $6 billion purchase of Affiliated Computer Services Inc., is expanding its services business internationally to boost sales after its largest deal ever.

“There’s significantly more to go -- it’s a big opportunity,” Chief Executive Officer Ursula Burns said in an interview yesterday after the company’s investor briefing at the New York Stock Exchange. ACS, which helps customers handle tasks such as accounting and human resources, gets more than 90 percent of its sales from North America.

Burns is trying to squeeze costs and boost sales while integrating ACS. She projects that expanding services -- first in Europe and then in Latin America -- will increase sales in the unit 6 percent to 8 percent next year.

“We have a very, very strong presence already,” Burns said. “Xerox is everywhere in Europe.”

The company boosted its 2012 earnings forecast yesterday and also reiterated its profit forecast for this year, according to a statement.

Xerox, based in Norwalk, Connecticut, climbed 28 cents, or 2.8 percent, to $10.46 yesterday in New York Stock Exchange composite trading. The shares have dropped 9 percent this year.

The company has started hiring sales personnel for services in Europe, focusing on selling first to Xerox customers, Burns said. The services market there could be a $3 billion business for Xerox, said Lynn Blodgett, the former CEO of ACS who now heads the division for Xerox.

Cost Cutting

Xerox cut costs by $100 million in 2010 after the ACS deal, and plans to slash another $120 million this year, Chief Financial Officer Luca Maestri said yesterday. Burns is using services from ACS internally to help Xerox lower costs. She’s also eliminated about 5,000 jobs.

While total sales climbed 16 percent last quarter as it gained ACS services, revenue at the company’s technology business, including its printing equipment and related supplies, was little changed for the second consecutive quarter.

Xerox forecast sales to increase by 1 percent to 3 percent in the technology unit next year, as it expands equipment distribution to small and medium businesses and boosts sales of color pages.

Per-share profit, excluding some items, will be $1.18 to $1.28 next year, the company said, boosting its earlier forecast of of $1.10 a share to $1.20. Analysts, on average, estimated $1.23, according to a Bloomberg survey. Xerox maintained its 2011 forecast of $1.05 per share to $1.10, excluding some items.

Repurchasing Shares

Total sales will increase 4 percent to 6 percent in 2012, compared with the company’s forecast of 3 percent to 5 percent this year. On that basis, sales would be at most $22.7 billion this year, compared with analysts’ average estimate of $22.9 billion.

Xerox also reiterated its plan to begin repurchasing shares this year, after halting buybacks after the ACS acquisition. The company will spend at least 70 percent of its available cash, which should total $1 billion to $1.2 billion, on the repurchases, starting in the third quarter, Maestri said at the investor briefing.

“It’s a huge deal -- massive, massive,” said Ananda Baruah, an analyst with Brean Murray & Co. of the repurchases. “It’s as big a reason that people are in the stock as anything else.”

To contact the reporter on this story: Katie Hoffmann in New York at khoffmann4@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.