Monday, September 28, 2009

Big move for Big X: $6.4 Billion to buy Affiliated Computers. MPS BPO

Go Ursala!

Sept. 28 (Bloomberg) -- Xerox Corp. agreed to buy Affiliated Computer Services Inc. for $6.4 billion in its biggest purchase, shifting to computer services as sales of its traditional printing equipment decline.

The transaction will help triple sales from services to about $10 billion, Xerox said today in a statement. The total price of the cash-and-stock deal is about 34 percent more than Dallas-based Affiliated Computer’s closing price Sept. 25.

The acquisition is Chief Executive Officer Ursula Burns’s first since taking over the world’s largest maker of high-speed color printers in July. The transaction helps her expand into a market the company values at about $150 billion and gives her a foothold in managing administrative operations for multiple arms of the U.S. government.

Is it good news or bad news for XRX?
I buy and hold so it's just a matter of time(2me). In any case it will be interesting to see how this plays out.

ColorQube is the solid ink competition to inkjet as toner levels off . The recent sales in MPS coming out of the UK and Canada sound good. The continued improvement in the black toner Nuvera series seem just right in a world where margins on color keep getting tighter.

If X can learn to focus, instead of being lulled by their legacy brand, it should work out fine.


  1. This is focus? This is getting away from the consumables business and jumping headfirst into the pool with IBM, Dell/Perot Systems, and HP/EDS. Is that good?


  2. Yep. Exactly.

    That's why I said "If X can learn to focus, instead of being lulled by their legacy brand, it should work out fine."

    What I didn't say in the post, is if they don't focus and keep SG&A at over 25% and believe they "own" a part of the market. They deeply screwed. But in that case either Japanese money or Hedge Fund money will come in and bail 'em out.

    Either way, long run, my XRX will be fine.