Options that Xerox should consider for the business include a joint venture, strategic capital partnership, alternative funding structures, partial monetization, or a sale of some or all of the business, according to Starteepo.
Xerox holder calls for strategic review of financial services business.
No
@az Fuji already was a conglomerate.
Wrong
Best part of all of this, I’ve heard much of the americas portfolios was sold off already. What’s left is not great
4 years ago, I literally drew up this shell game diagram on our sales white board and tried to figure out where the true value, profit was actually coming from. It's a ponzi scheme, where Xerox pays co-manufacturers to make/import equipment, then sells it to XFS. XFS "sells" equipment not to the customer, but to a bank. That bank was XFS (now PEAC), who collects the receivables over time from the customer, pays XFS value of equipment plus some of the vig, and then XFS pays Xerox for the equipment, Xerox pays manufacturer. Since this was when XFS was financing everything the circles I drew on the board made me look like that iconic Charlie Day meme. But once you understood that Xerox was so insolvent that they had to sell off the XFS receivables with 14% interest rates, just to fund the next equipment production batch, well that my friends is a house of cards, mid-collapse. And that was 2-3 years ago. At this point Xerox is most akin to Trump slapping his name on hotels and getting paid for the licensing rights.
@jf Rumor has it that Boris is the new Chief Engineer for Aston Martin Formula 1 racing.
XFS is underwritten by another bank. It’s not free inventory and renting to the client. They’re taking a loan from another bank at x% and marking it up to y%.
Xerox gets revenue recognition upfront and XFS runs like any other financial institution. Interest and investments. You think XFS all of a sudden has money to eat the cost and inventory that Xerox can’t? LOL.
The value is the same as a housing broker. You take enough good loans, couple bad, and then sell them to another bank. That bank is buying future interest payments while the broker takes less profit upfront. It happens in every industry. Especially furniture financing.
https://hartfordbusiness.com/article/major-investor-of-norwalk-based-xerox-urges-review-of-financial-services-business/
"STARTEEPO estimated the financial services unit has an enterprise value of between $1.3 billion and $1.5 billion. The fund urged Xerox to disclose more information about the unit’s receivables, funding costs, credit performance and profitability."
There's a reason the receivables, costs, credit and profitability are buried. It's all bad!
IF XFS was spun off, where would the lending capital come from? Are they going to take the last couple of bucks Xerox has with them? Will they try to issue bonds under a different corporate name? I have to believe these guys are trolling XRX SLT, or angling for something, like a buyback of their shares. There is a non 0% chance this is corporate blackmail: buy our shares back or open the books.
It's all so very weird.
@em unless you are Bullwinkle J. Moose, you will need to pull a rabbit out of your hat.
@bv so basically the end is nigh - there is no way they come out of this
@eb see I’ve always wondered how XFS works and you have enlightened me. I always think of XFS as a bank per se - but not really in that true sense. Also how do they make money? If the customers are financing equipment - surely margins can’t be that high? How do they make money - on interest payments?
@eb WOW, this stuff is way over my head. I would just assume that Starteepo knows what they are doing, but maybe not.
All I know is, 4.2 million debt or whatever it is, is not attractive to any buyers and the reps better start selling lotsssss.
This might be a mountain to big to climb, just my .02
So these Starteepo people think XFS can be spun off and has a value over $1BN?!
LOL. XFS is a circular financing tool to get rubes to buy Xerox gear, and works only because it is underwritten by Xerox to get people to buy Xerox. There is no "value to unlock" as they are loaning out money to buy things they already own.
If XFS loans you $1million to buy a factory, XFS has to pony up $1 million and give it to you. If they "loan" you $1 million to buy Xerox gear, they pony up nothing and the other side of the house delivers the gear and XFS collects payments plus interest.
They do loan out money for non Xerox gear, but that % is really small, as it would require real money on hand to transact.
They have nominal assets and liabilities on the books, but it is just mostly Xerox gear, moving to a different column on the ledger sheet. If you spun off XFS, they would have no real financial interest to loan for XRX purchases, because they would actually have to hand money over, like they do now for a loan for a 3rd part vendor that isn't XRX.
There is no hidden value in XFS, it's a store branded charge card where people can buy Xerox over time.
They can't sell any of the business lines or borrow another dollar without violating a debt covenant. That is why they did the IP JV; it was the only allowable scam to scrounge money.
There are no more levers to pull, or Hail Marys to throw. They are just coasting to the abyss now.
I always thought it was interesting Xerox never put a patent on their new style ball mouse. Apple just used the idea, what were our patent attorneys doing when all this stuff came out of PARC? They had one job.
Or they could have diversified into pharmaceuticals, medical imaging, Healthcare, just like Fujifilm did because they saw the collapse coming.
We were too busy prioritizing diversifying the workforce instead.
But, this is the company that gave up technology to Apple and Microsoft. Maybe it is best they just go away.
We should also leverage unexploited technology options, optimize strategic partnerships, crisply execute current strategies, capture all emerging opportunities, and buy an F1 ride....
You’re selling ice in Antarctica.
No one wants it, and you can get it free everywhere. But somehow you think it’s a good and viable idea.
Ummm…Not so Much…..