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Resurrected CEO at Xerox Tries to Reassure Shareholders

Corporations: With reform-minded leader ousted, new team hopes to turn the company around.

May 19, 2000|From Reuters

PHILADELPHIA — A week after the ouster of reform-minded Chief Executive Richard Thoman, Xerox Corp.'s top managers on Thursday sought to reassure stockholders that they can regain ground lost in the global office products market.

Chairman Paul Allaire, who resumed his former post as CEO on May 11 after Thoman resigned from the world's leading copier maker, told the annual shareholders meeting here that Xerox had seen the worst of low sales-force morale and damaged customer relations caused by months of market repositioning.

"A lot of that is clearly behind us," said Allaire, who had been CEO from 1990 until last year when he yielded the Xerox helm to Thoman, an outside reformer who was hired from IBM Corp. in 1997.

"We are going to have as our primary driver a focus on the customer and customer satisfaction. That will be a key thing to motivate the sales organization," Allaire added.

The shareholders meeting marked the first public appearance for Allaire since he resumed the CEO job, and for Anne Mulcahy, newly appointed president and chief operating officer whose job it will be to usher in changes necessary to turn the venerable U.S. technology company around.

Some Xerox shareholders were openly confident that Allaire would be able to reverse Xerox's flagging fortunes, saying the 61-year-old executive was unlikely to let a successful corporate career end in failure.

Thoman, criticized by some as an aloof leader who failed to deal effectively with an established Xerox culture, spent 13 months slashing jobs, realigning the sales force to focus on key industries and updating the product line to emphasize digital copiers and printers.

But Xerox executives, who continue to embrace the new strategy, say the changes came too quickly and caused too much disruption.

The process had a negative effect on Xerox's financial health, sending profit sliding 16% in 1999 and 36% again in the first quarter of this year.

The company's share price also suffered a dramatic loss, falling from $64 a year ago to as low as $20 this spring before rebounding slightly.

On Thursday, Xerox shares closed at $26.81, down 31 cents on the day in New York Stock Exchange trading.

"Our strategy is rock solid," said Mulcahy, the company's highest-ranking female executive who is now in line to succeed Allaire as CEO when he steps down in two years.

"What's in front of us is ensuring that we now have the right kind of customer relationships and that the sales reps are . . . understanding the requirements of the customers they're now serving."

In recent weeks, Xerox has offered its salespeople fresh incentives while rolling out new products and marketing initiatives, including new strategic alliances with Microsoft Corp. and Dell Computer Corp.

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