Sales from high end production equipment continued to fall for Xerox in Q3, despite the better than anticipated demand for the Iridesse, the FujiXerox developed digital press uniquely able to print six colours.
But this failed to compensate for a fall in demand for the iGen presses which are built by Xerox in the US and which carry both a higher price tag and must represent a bigger margin for Xerox. There was a 17% decline in installations of high end colour presses, both iGen and Versant models. Only in the mid range machines was there an increase in sales. Overall equipment revenue fell by 3.8% to $511 million compared to $531 million 2017.
Total revenue for the quarter was 5.8% lower at $2.35 billion ($2.50 billion), delivering a pretax profit of $192 million ($167 million).
Presenting the first quarterly figures since becoming CEO, John Visentin stressed instead the improvements at the lower end and on efforts to increase revenues. “We were disappointed in the revenue in Q3. We have an action plan to improve revenues that include, among other things, simplifying the organisational structure, improving alignment of compensation and evaluating contracts that are not profitable,” he said in an analysts call.
This amounts to head count reductions in IT as the company reduces the number of software systems it operates to bring costs in line with a business of the size it has become; it is also looking at hiving off some its property portfolio as well as rationalising the product portfolio in order to remove costs from the supply chain “eliminating numerous configurations of essentially the same product and by employing a better design for efficiency through an increased use of common parts”.
This is accompanied by a “more simplified and agile organisational structure” which amounts to the loss of management layers and “elimination of resources in areas where capacity or skills were sub optimal”; the creation of greater commerce applications for order management and placement for lower value products.
Also under threat is inkjet. Under previous CEO Jeff Jacobson inkjet represented the future for the company, with the Brenva cut sheet and Trivor continuous feed inkjet presses in particular carrying the Xerox flag. Now the new CEO says that “We are examining our RD&E investments in xerography and inkjet to ensure that we maintain technology leadership and that we have the best approach to realise the high rates of return that we require.”
Xerox already produces print heads that are used in 3D printing, hence the development of a roadmap to participate in this sector. “We are also accelerating market growth in emerging innovation areas to more quickly decide whether and how to incubate and scale opportunities for monetisation. One example of this is the work we are doing around smart tags and printed electronics.”
There are opportunities for Xerox in printed electronics and 3D printing, but new CEO John Visentin says the company is looking at how its R&D spend is directed in toner and inkjet printing.