Xerox Releases Q1 2017 Earnings

Today, April 25, 2017, Xerox released their Q1 2017 Earnings Report and the following is Photizo’s summary.

I have attended several Xerox events recently, the investor conference in NYC in December 2016 and the Xerox announcement event also in NYC at the end of March where Xerox announced 29 new products.

29 New Products and 2 New Brands

The VersaLink Family is designed for the SMB market and the AltaLink Family is for large enterprises and centralized environments. The following represents a new product line with 29 devices.

 Xerox VersaLink Family – targeting SMB

  • 19 products including 12 A4 products and 7 A3 products
  • More aggressive price/performance
  • 5” display on lower end products and 7 “ display on higher end products
  • Ideal for multi-brand dealers
  • Strong value proposition
  • Entire product line available to the channel.

Xerox AltaLink Family – targeting larger enterprises, more centralized environments

  • 10 new products, all A3
    • 5 mono, 5 color
    • Share common controller, 2 controller families
  • Smart, powerful, scalable, built in security
  • Total new UI with fewer steps for tasks vs. competitive products
  • Built in NFC for future proof, now Android, future Apple
  • Remote UI
  • Built in security

The Xerox hardware was impressive and very competitive but these days, the market expects good hardware, sort of like an ante in a poker game.  What impressed me even more than the hardware that Xerox announced was what they were doing with regard to improving workflows for various vertical markets and the tools that they developed for their channel.  I also was impressed with what Xerox was doing with their Personalized Application Builder (PAB) and ConnectKey and how they were assisting their partners to build applications and optimized workflows which are driving their hardware, software, supplies, and services business.

Okay, how is Xerox performing against their transformation plans announced at the end of 2016?

 

 

Xerox is making good progress in their strategic growth areas:

 

From a financial performance standpoint, in the previous quarter, Xerox was performing quite well relative to their competitors

For the latest quarter, on a YOY perspective, while revenue declined, operation profit margin increased which may be a result of some of Xerox’s cost reduction initiatives.

The following is Xerox’s performance by product segment:

Entry level products

  • 15% increase in color MFP shipments – likely due to new product introductions
  • 1% increase in mono MFP shipments – due to larger account deals in developing countries

Mid Range products

  • Mid range color installs were flat compared to the prior year due to growth in developing markets
  • 24% decrease in mid-range mono devices reflecting overall market decline and expected upcoming product launches

High end

  • 15% decrease in high-end color due to timing of installs and upcoming product launches
  • 25% decrease in high-end monochrome printers consistent with overall market decline in market trends

So, how does Photizo feel about the future prospects for Xerox? Well, they have a new, high energy executive team headed up by Jeff Jacobson who have set aggressive but achievable goals to transform the Company and they appear to be making progress.   They launched 29 new products at the end of March 2017, but, more importantly, they realize the value of training their channel to develop and sell new applications and to consult on improving workflows for various vertical markets based on ConnectKey and there Personalized Application Builder (PAB).   Xerox is clearly moving their direct sales/support team and their channel from selling boxes to consulting on applications and workflows.  It will be these new applications and new workflows that will drive Xerox’s hardware, software, supplies, and maintenance revenue in the future. Having great hardware is just not enough anymore, if you think so, your future may not look so bright.

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