Xerox's Drive - Digital Colour To Double By 2009

Xerox has claimed that it is delivering shareholder value through a consistent strategy to capture growth and competitive advantages that win customers.

Xerox has claimed that it is delivering shareholder value through a consistent strategy to capture growth and competitive advantages that win customers, as well as a strong business model that expands earnings and generates significant cash flow.

The company's chairman and chief executive officer, Anne M Mulcahy, delivered that message this week at the Xerox's annual investor conference in New York (USA).

Mulcahy joined other Xerox executives in reviewing the company's progress, growth opportunities and objectives for 2006.

She commented: "We're proud of our accomplishments, confident about our strategy and bullish about our future.

We've created a growing, annuity-based business that reflects the power of our innovation and insights in to the document management market.

Our effective execution is delivering profitable growth and strong financial performance that will continue to build shareholder value." Mulcahy noted that Xerox's revenue growth strategy is aligned around expanding its share of the $112 billion (GBP65 billion) document market through three major initiatives.

They include driving the rapid adoption of colour printing in small to large businesses, whilst exploiting Xerox's digital high-volume printing to complement traditional offset printing.

The company's digital technology offers the advantages of creating personalised communications and on-demand printing, added the company.

For next year, Mulcahy said she expected total revenue to grow by three per cent and earnings per share to grow between 10 per cent and 15 per cent to a range of $1.00-$1.07 per share.

During the conference, Mulcahy outlined what she saw as Xerox's competitive advantages, including its portfolio of digital document systems for production environments of any size.

The company produces a steady stream of technology, including 49 new products to date this year that have won 260 awards, she added.

She continued by adding that two-thirds of Xerox's equipment sales revenue comes from products introduced in the past two years.

The company holds more than 8,000 active patents and invests about six per cent of its revenue in research, development and engineering.

And in noting that the market for digital colour is expected to double by 2009, she added: "Just as Xerox created the market for digital mono printing, we're leading the transition to colour, making quality colour printing more affordable and easier to use for businesses of any size." She added that colour is not only a strategic imperative for Xerox but is also becoming a critical application for its customers.

More and more businesses are shifting to digital colour systems to produce personalised, colourful materials for marketing, financial statements, catalogues, and user guides on Xerox digital devices, including the iGen3 digital press, the Docucolor production printers, Workcentre colour multi-function devices and Phaser solid ink desktop printers.

Through the third quarter of this year, Xerox's colour revenue has grown 18 per cent, and colour now represents 29 per cent of the company's total revenue.

The number of pages printed on Xerox colour devices is nearly double from two years ago.

More than 10 billion production colour pages will be printed on Xerox systems this year, commented Mulcahy.

"Revenue and gross profit from colour pages are five times greater than black-and-white pages," added Mulcahy.

"With less than seven per cent of Xerox pages printed on colour devices, the growth opportunity is huge.

It's a great business model, an attractive market, a competitive advantage and it's delivering solid returns." And she continued: "With more than 50 years of experience creating and leading our market, Xerox has developed unparalleled expertise in document management.

Through Xerox Global Services, customers benefit from our ability to simplify their document-intensive work processes, manage their document-related assets, develop systems to easily search, retrieve and store digital files and provide other services that add value and integrate with our technology." Those services represent a $20 billion (GBP11 billion) market for Xerox, said Mulcahy, who added that the strength of Xerox's relationships in large enterprises leads to services-driven technology wins.

Mulcahy went on: "We're reaching more customers in more places around the globe through more diverse channels of distribution." She also reiterated previously stated guidance for the fourth quarter of 2005, expecting earnings in the range of 25-29 cents per share.

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