Xerox CEO Mulcahy to retire
Xerox Corp., the world's largest maker of high-speed color printers, said Anne Mulcahy will retire as chief executive officer of the company she helped revive, naming President Ursula Burns as her successor.
Mulcahy, 56, will remain chairman, the company said in a statement today. She started at Xerox more than 30 years ago and took over the top spot in 2001, charged with reversing repeated quarters of sales declines.
At the start of the decade, the bursting technology bubble left Xerox with mounting debt and its first annual loss in five years. Mulcahy has since exited unprofitable businesses and cut at least 20,000 jobs. The worsening recession dealt her another setback as clients pared technology budgets, prompting her to trim payrolls back further to shield profitability.
"It's a testament to what she has built," said Shannon Cross, an analyst at Cross Research in Livingston, New Jersey. "She took a company that lost significant market share, was not competitive, was trailing in terms of some of the technology that was deployed in the marketplace and one that was on the brink of bankruptcy, and she's turned it into a company with continued market share gains."
Burns, 50, has been with her through most of that, joining Xerox in 1980 as a summer intern focused on mechanical engineering. The promotion will make her the only black female CEO among the Fortune 500's top 150 companies, according to Xerox spokesman Mike Moeller.
Working Together
"For the better part of the past decade, she has been at my side helping to turn Xerox around," Mulcahy said today at the company's shareholder meeting in Norwalk, Connecticut.
Burns was seen as the likely successor to Mulcahy after she took over as president in 2007, Cross said. Burns previously ran parts of the business such as product development and marketing. She will officially take over July 1.
In 2000, Xerox shares plunged 80 percent as former CEO Richard Thoman led the company to exhaust its $7 billion line of credit. Mulcahy took over in 2001, and doubled the share price over the next three years.
Xerox stopped making personal copiers and started focusing on laser printers, as well as color printing. The moves, along with Mulcahy's cost-cutting, helped increase sales and lower the company's long-term debt to about $10.8 billion last year, from more than $18 billion the year before she took over. The executive also reinstated the company's quarterly dividend in 2007, after it was discontinued in 2001.
Xerox dropped 8 cents to $6.82 at 11:58 a.m. in New York Stock Exchange composite trading. The stock had fallen 13 percent this year before today.
Falling Sales
Burns is taking the helm as the company tries to navigate another slump that's forcing customers to rein in expenditures. Global technology spending may fall 3.7 percent this year, according to research firm Gartner Inc.
Sales of Xerox printers and other hardware fell 30 percent last quarter, pushing total revenue down 18 percent. Equipment sales are an indicator of future demand for paper, toner and other supplies, which make up about four-fifths of sales.
Still, the company posted net income of $49 million for the latest period, its fourth straight quarterly profit, after slashing administrative expenses 11 percent. The company's full- year profit forecast met analysts' estimates.
"She's certainly taking over at a difficult time," said Michael Holt, Chicago-based analyst at Morningstar Inc. who doesn't own the shares. "The challenge will be to try to find demand when most companies are looking at ways to cut their costs on things like printing."