Just two months ago, Xerox hired part of the Chelsea Piers sports complex in New York to demonstrate to analysts and business journalists the advances it had made in the production of a new inkjet printer. Xerox chief executive Mr Paul Allaire said he expected it to turn the company around.
He also said in an interview that the Xerox facility at Dundalk, Co Louth, was central to this development and there would be no lay-offs there.
Yesterday the troubled copier-maker announced it would discontinue its line of personal inkjet and xerographic products sold through retailers and quit the small office/home office business having failed to sell it. Up to 360 jobs are likely to be lost in Dundalk.
This is just the latest in a wave of troubles that has battered the New York-based company in the past two years. Xerox misjudged the inkjet printer business, allowing rival Hewlett-Packard to build a profitable inkjet division that is now larger than all of Xerox.
In 1998, the company slashed 9,000 jobs and took a $1 billion (€1.17 billion) write-off. Its share value rebounded in 1999, hitting a peak of $64, as Mr Rick Thoman of IBM was named chief executive and Xerox embarked on a recovery programme.
However, attempts to modernise the old culture of Xerox backfired, earning and shares plummeted, and US inkjet printer sales fell to a a miserly 2 per cent share of the market. It also saw its share of the copier business fall to just over 20 per cent.
In May 2000, after 5,200 more workers were laid off, Mr Thoman was ousted and replaced by Mr Allaire. The stock price plummeted to less that $5 early this year, though it has since recovered to touch $11 before slumping back to $8.30 yesterday.
The finances of Xerox, still a worldwide powerhouse with 90,000 employees, are now dire and the company has been taking a beating in the financial media. BusinessWeek magazine ran a cover story on March 5th in which it blamed directors for being "asleep at the wheel" as competitors ate into its core business.
By March the total debt was $17 billion, including a $7 billion credit line exhausted last year after it failed to roll over its commercial paper. Cash on hand amounted to $1.7 billion. There were reports that Xerox would have to file for Chapter 11 bankruptcy.
However, Mr Allaire told The Irish Times at the Chelsea Piers event that, by selling 25 per cent of Fuji Xerox for between $1.2 billion and $1.4 billion cash, and with $1.7 billion cash in hand, bankruptcy was "not an issue". Xerox planned this year to raise $4 billion by selling off assets.
The failure to divest itself of the small office/home office division represents a setback for a turnaround strategy, which included seeking equity partners for its inkjet business. It will save in excess of $100 million by exiting the business but it will take a charge of $200 million.
Xerox claimed the move would add about $0.10 a share to its second-half results and that the company would return to profitability for the second half and the full year. However, Xerox president Ms Anne Mulcahy reiterated that it expected to post a second-quarter operating loss in line with its first-quarter results, which showed an operating loss of $86 million, or $0.12 a share.
