Xerox Corp pummeled by Y2K worries

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March 10, 2000: 3:49 p.m. ET

STAMFORD, Conn. (AP) - Xerox Corp., its profits pummeled by a restructuring, Y2K worries and a realignment of its sales force, will take aim at rival Hewlett-Packard with a new line of inkjet printers. The announcement, scheduled for a news conference in New York City Tuesday, will center on a new line of inkjet printers intended to compete with HP's desktop models, the Wall Street Journal reported Friday.

Xerox spokeswoman Christa Carone in Rochester, N.Y., confirmed that the announcement will deal with small-office and home-office products. But she said she could not release any details or confirm the newspaper report.

Analyst Ben Reitzes of PaineWebber Inc (PWJ: Research, Estimates). told the newspaper that Xerox is trying to create a product line offering a higher-speed, lower-cost alternative to HP's models, which range from about $100 to $800 and print up to 12 pages a minute. Palo Alto, Calif.-based HP dominates the home printer market, which has grown as Internet and home computer use increased. HP spokesman Nolan Sundrud said the company knows Xerox has filed several patents and has anticipated it would develop products based on the technology. He said HP (HWP: Research, Estimates) isn't "frightened or concerned" by the Xerox announcement. Last year, Xerox invested $300 million in inkjet development, building production plants in Ireland and New York, and has an agreement with Lexmark International Group Inc. (LXK: Research, Estimates) to make inkjet printers for Xerox. Xerox announced in January that its fourth-quarter earnings were down 52 percent as it struggled with increased competition and sales that were diminished by anxiety about possible computer problems related to the change to 2000. The company said it is pursuing cost-cutting steps but did not elaborate.

Earnings were down 11 percent in the third quarter, and the company warned that similar declines are likely in first and second quarters this year.

The company also blamed part of a sales slump on a reorganization of its sales and billing systems. In 1999, Xerox announced a plan to streamline its U.S. customer administration by consolidating 36 billing centers across the country into three centralized centers. The company also said it would reorganize its 14,000-person sales force to boost sales of "bundled" services to corporate customers integrating fax machines, printers, copiers and personal computer software. Xerox (XRX: Research, Estimates) said it planned to move its sales force away from geographical coverage toward coverage of specific industries.

Both moves have caused disruption and slowed productivity, the companyacknowledged.

http://cnnfn.com/2000/03/10/companies/wires/printer_wg/

-- Martin Thompson (mthom1927@aol.com), March 10, 2000


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