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Xerox to Trim 9,000 Jobs and Take a $1-Billion Charge

April 08, 1998|From Bloomberg News

Xerox Corp. said it will cut nearly 10% of its work force and take a $1-billion second-quarter charge in a restructuring designed to strengthen its position in the rapidly growing business of digital copiers and printers.

The company said it will eliminate 9,000 of its 91,000 jobs, shut factories and warehouses and hire outside companies to handle storage and distribution.

Xerox said it expects the initiatives to result in pretax savings of $1 billion annually, which it plans to use to build up such high-margin businesses as servicing equipment.

Xerox's new president, G. Richard Thoman, in September said the company would sell inexpensive and mid-priced printers, a business in which Hewlett-Packard Co. had a 95% market share in 1996. Thoman is trying to get Xerox to match Hewlett-Packard's frugal costs for selling low-priced printers and copiers.

Stamford, Conn.-based Xerox expects the second-quarter charge to be about $2.75 a diluted share, said spokesman Brent Laymon. Before the announcement, Xerox was expected to earn $1.06 a share, the average estimate of eight analysts polled by IBES International Inc.

Xerox's sales last year totaled $18.2 billion, or about $199,000 per employee. Hewlett-Packard generated about $352,000 in sales for each of its workers, for a total of $42.9 billion in the fiscal year ended October 1997.

About 3,800 jobs will be cut in the U.S., 3,600 in Europe and the rest in Latin America and Canada. Xerox said about 5,000 employees are eligible for a voluntary severance package.

Xerox shares fell $1.31 to close at $106.81 on the New York Stock Exchange.

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