Document technology giant Xerox plans breakup

Xerox joins the list of large technology vendors that have moved to split their operations into separate organizations in recent months.

Giant document technology company Xerox -- the brand that became a verb -- announced today that it would split into two independent publicly traded companies, one that focuses on document technology and the other on business process outsourcing.

Also announced today was an agreement between Xerox and Carl C. Icahn that when the business process outsourcing (BPO) company separation is final, Icahn gets to select three of the nine members on the board of directors.

Like other big technology firms -- IBM, HP, and EMC -- splitting into two smaller and more focused organizations will allow each entity to be more nimble and responsive to its customers as well as more efficient economically, according to statements made by Xerox.

"Xerox's move mirrors similar restructuring efforts by HP, IBM and other major technology companies that have recognized over the past few years that rapidly changing market requirements demand a more focused set of solutions and go-to-market strategies," said Jeffrey Kaplan, managing director at THINKstrategies Inc.

The separation of the company that was founded in 1906 and reported in excess of $19 billion in revenue in 2014, is expected to be completed by the end of the year. At that time the split will result in an $11 billion document technology company and a $7 billion BPO organization -- which would be largely made up of Affiliated Computer Services, a $6.4 billion acquisition made by Xerox in 2010.

In a public statement, Ursula Burns, chairman and CEO of Xerox said, "These two companies will be well positioned to lead in their respective rapidly evolving markets and capitalize on the opportunities that now exist to expand margins and increase market share."

"I am confident that the extensive structural review we conducted over the last few months has produced the right path forward for our company. We will now position the companies for success and execute our plan to separate them in the shortest possible timeframe while continuing to focus on achieving our 2016 goals," she added.

Kaplan said Xerox's reorganization also shows the increasing importance of the company's services business. But the key to Xerox's success, he added, will be its ability to transform that aspect of its operations to better leverage the growing array of cloud alternatives to more cost-effectively satisfy its customers' changing needs.

Currently, Xerox is a global business with a presence in 180 countries and more than 130,000 employees.

The Xerox Global Partner Program is made up of agents, concessionaires, document technology partners, solution providers and volume partners, who participate in a tiered membership structure consisting of registered, silver, gold and platinum partners.

In July 2015, Xerox in an effort to expand its footprint in the small and medium-sized business markets, expanded its managed print service portfolio and efforts through its partner channel.

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