Xerox: Services to Make up 66 Percent of Revenue by 2017

At its annual investor conference being held today, Xerox is detailing its strategy with a focus on delivering long-term value for shareholders through earnings growth, strength in a diversified portfolio and innovative technology and services.

“Fifty-six percent of our revenue now comes from services and we’re on track to grow that number to 66 percent by 2017. We’re managing our business for growth and margin expansion in services, and for maintaining strong cash flow and market leadership in document technology,” said Ursula Burns, chairman and chief executive officer. “Investments in services coupled with our expertise in vertical markets gives us the competitive edge needed to provide targeted solutions in a wide variety of industries from customer care and education to transportation and healthcare.”

Among the areas Xerox will focus on are:

Vertical Industries

Xerox says it’s taking advantage of growing markets, including healthcare. In 2013 the company unveiled its next generation Medicaid Management Information System, offering states new efficiencies on a modern platform. PARC, a Xerox company, developed proprietary software to combat fraud, waste, and abuse in healthcare applications. Xerox also supported the launch of health-insurance exchanges in Nevada, Kentucky, and other states.

Document Management

Xerox is connecting its Managed Print Services (MPS) with its business process and IT outsourcing capabilities to create what it’s calling the next phase in document outsourcing, automating workflow with technology and consulting services to help clients meet the needs of an ‘always-on’ mobile workforce.

Document Technology

As a technology innovator, one way Xerox is capitalizing on the growing need for customized communications is in digital printing. Xerox offers a portfolio of advanced production presses that include waterless and inkjet-based solutions that it says enable print providers to deliver tailored services.

During the investor conference, the company will outline its expectations for 2014 financial performance. Full-year 2014 earnings per share are expected to be in the range of 93 to 99 cents. 2013 full-year expectations remain unchanged, with earnings per share from continuing operations to be in the range of 93 to 95 cents.

For 2014, Xerox expects operating cash flow of $1.8 to $2.0 billion, with no finance receivable sales planned. The company also expects to allocate at least $500 million for stock buyback, and anticipates spending up to $500 million on acquisitions and $300 million on dividends. Building on its share repurchase plan, Xerox’s board of directors has approved a $500 million increase in its current share repurchase plan which brings its current authorization level to approximately $1.5 billion.

The company continues to expect operating cash flow for 2013 at the higher end of its $2.1 to $2.4 billion range, which is enabling greater than $600 million in share repurchase.

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