Xerox Still in Talks with Fujifilm; Eyeing 3D-Printer Market

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In a conference call with investors this week, Xerox CEO John Visentin and  CFO William F. Osbourne discussed the company’s third-quarter 2018 results, as well as some possible expansion for Xerox into 3D printers.

CEO Visentin first discussed third-quarter results: “We were disappointed in the revenue in Q3. We have an action plan to improve revenues that includes among other things, simplifying the organizational structure, improving alignment of compensation and evaluating contracts that are not profitable. We will go through each of the priorities in more detail. But I will start with a closer look at our results.

“Revenue in the quarter was down 4.7 percent at constant currency with equipment revenue performing better, down 2.7 percent, while post sales declined 5.2 percent. Both A4 and A3 equipment revenue grew at a constant currency, up 9 percent and 1 percent, respectively, showing the continued momentum from our ConnectKey products. While high-end declined 5 percent, we did improve from Q2 and we saw good market demand for our new Iridesse printing press.”

Fujifilm Talks

CEO Visentin also discussed Xerox’s communications with Fujifilm – which had sought to purchase Xerox: “But we’ve had continued communications with Fuji and with them as JV partner (Editor’s Note: joint venture partner in Fuji Xerox). In fact they were here recently for discussions on how as a prospective they can provide and earn our business. We have regular Fuji board meetings which we have representation. As for the appeals court favor, like we don’t believe it means very much for Xerox because Xerox terminated that transaction for reasons unrelated to the injunctions.”

Strengthening e-Commerce

CEO Visentin also said Xerox would be strengthening its e-commerce capabilities: “Enhancing our e-Commerce capabilities; this is an area where we will be making investments and changes, including investment in our partner e-Commerce portal for order management, inventory availability, shipping status, and much more functionality that makes it easier for partners and our end customers. We will also invest and grow our direct e-Commerce portal for product information, order placement and shipping status.

3D Printing

Visentin also discussed Xerox entering the 3D-printer market: “Our leading expertise in technology and printing uniquely positions us to move into adjacencies that share similar core technology requirements. For instance, we are developing a roadmap to participate in 3D printing. We currently manufacture 3D printouts that we OEM, where we have differentiated capabilities around print technologies, materials, toner and software that will enable 3D printing to move to the next level of adoption for the production of end-use industrial products.”

The word “printouts” in the paragraph above is probably a transcription error and most likely is printheads. Xerox today manufactures and OEMs printheads that are used by third-parties – for instance, on this Web page, the company states: “Our unique printheads are now being successfully applied to 3D printing, textiles, direct-to-object printing, pattern etching and other industrial printing uses.”

Closer Look at Product Revenue

Xerox CFO Osbourne provided a more detailed look at third-quarter product revenue, noting that “black-and-white entry A4 products continued to show strong growth, while color multifunction installs declined.”

At the same time, mid-range equipment revenue made up 69 percent of equipment revenue. Areas of growth included US enterprise, driven by large-account sales and continued growth across developing markets.

According to Osbourne, offsetting this growth were declines in Europe reflecting “in part a more challenging compare given higher channel purchases in the prior year associated with the building up sufficient supply of newly launched products.”

Installation growth of mid-range products overall outpaced revenue, driven by a mix toward mono and lower-end color devices, in part from the better growth in developing markets, where installation tend to be toward the lower end.

According to Osbourne, “midrange A3 is a key leadership segment for Xerox and overall it is mid-range that has driven our equipment revenue share gains over the past three quarters….growth needs to continue to get higher MIF and drive post sale improvement.”

In the high-end, Xerox’s revenue was very mixed. High-end equipment revenue made up 18 percent of total equipment revenue and the decline improved sequentially down 5.1 percent, versus down 9.9 percent in Xerox’s second-quarter 2018. Osbourne noted that Xerox saw strong demand for its  new Iridesse press “that exceeded our expectations.: However, this growth was not enough to offset the impact of the lapping of the Versant product launch and declines in iGen.

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