GG here:
Well folks. Today is the day we all saw coming a mile away. As of this morning and the Goodwill write down, XRX has a total enterprise value lower that its debt.
Technically, XRX is worth more dead, than alive.
What can we expect now? Perhaps:
A lower bond rating? This could actually help XRX in the short term, it they use cash to buy back debt for pennies on the dollar. Knowing what we know now, a CCC+ rating might be generous.
A supply chain, chain reaction? LP admitted in the call that vendors are restricting credit, which forces spot payments, or rotating to higher priced vendors willing to shoulder the credit risk for inflated prices charged. He didn't let that slip on accident; he said it because he had to, his hand was forced and he had to disclose. Vendors are the lifeblood of a business and when credit is cut off, that is game over. We are near that point now. Every major vendor was on that call today and heard the same thing you did form LP.
Slow pay, no pay? On the flip side are the people that pay XRX, and the doom loop effects these people too. How excited are people to renew service with a proprietary vendor that could go belly up? Also, there are a lot of gross people out there that will slow pay, no pay a vendor they think is going belly up, as to buy time at 0$ interest or see if the bill disappears in CH11 proceedings.
New business? People who are already in bed with XRX in the form of proprietary hardware are one thing, but net new clients are another. Why would anyone sign up for that kind of vendor risk? Large companies won't, just the small and uninformed.
TL;DR from the call:
Vendors are cutting us off.
We are worth $1BN less than we were on Monday.
We can no longer pay dividends.
Sales are down.
Cash is gone.
We are blaming this all on the price of Oil and RAM.