Always on a Sunday
https://investor.hp.com/news/press-release-details/2019/HP-Sends-Letter-to-Xerox/default.aspx
9 replies (most recent on top)
Xerox is officially a dead company. Anyone with a brain has walked away or is in process. Those that stay are fools at this point. Look beyond next week if you have years to work...
Two out of two is always
"Always", you mean the two times?
While I completely agree with @12cBMH7s, none of this matters to Mr. Icahn. He wants his $40/share for Xerox and will use his control of Xerox and threat to HP (4% ownership) to get his way regardless if this deal makes any business sense (it doesn't) and his interest in the future success of Xerox and HP ends the day he sells his shares in both.
While I wouldn't necessarily consider an hp purchase of x to be a knight in shining armor scenario, IF it sent icahn and his goons packing, I'd be happy with that.
HP is represented by Wachtell, Lipton, Rosen and Katz
Perhaps Xerox's old managment should have consulted them
From their webpage:
Shareholder Activism
Wachtell Lipton is a leading defender of companies that are under attack by shareholder activists. We have advised numerous public companies, including AOL, Vulcan Materials, Clorox, Forest Laboratories, CVR Energy, Target, Motorola, Office Depot, Longs D–gs, Lionsgate and Convergys in responding to activist shareholders such as Carl Icahn, Pershing Square and JANA Partners, as well as other hedge fund and corporate governance activists.
In short, you're desperate and we know it. You need us more than we need you.
Johnny V and Carl I remind me of schoolyard bullies who believe they can browbeat and intimidate others around them to achieve their objectives. I sure hope they receive a lasting beat down where it counts the most - on wall street in the form of a sinking stock price.
HP really nailed the key points regarding Xerox and it’s terrible outlook:
Xerox has missed consensus revenue estimates in four of the last five quarters;
Xerox’s revenue has fallen from $10.2 billion to $9.2 billion (on a trailing 12-month basis) since June 2018, and this is expected to continue – Xerox management projects revenue declines of 6% in fiscal 2019;
Given how much of your business is based on contractual revenue, we are concerned about the decline in customer Total Contract Value (TCV) in excess of revenue declines, which suggests your revenues may decline even faster in future years. We note that the TCV of enterprise signings (including renewals) in 2018 was down 13.9% in constant currency and your churn for 2018 was 18%, both data points which Xerox has stopped providing publicly since the end of 2018;
Our review of synergies based on public information and the limited information you have shared does not support achievable synergies of the scale you suggest, and it appears that your assumptions include significant savings that are already included in each company’s independently announced cost reduction plans; and
It appears to us that when Xerox exited the Fujifilm joint venture, Xerox essentially mortgaged its future for a short-term cash infusion. We fear that the exit has left a sizeable strategic hole in Xerox’s portfolio. In addition, we have concerns as to the state of Xerox’s technology resources, research and development pipeline, future product programs, and supply continuity and capability. Finally, we note that Xerox will have to get access to the fastest growing Asia Pacific region.