Xerox invented the photocopier, and for a while the company's name was synonymous with its creation in a similar way to Hoover, Biro or Kleenex. But during the late 1990s rival technology companies including Hewlett Packard and Canon discovered newer and cheaper methods for document imaging, substantially undercutting Xerox's position in the overall market. The group's biggest mistake, arguably, was to relinquish the results of its pioneering research into personal computing systems in the 1970s to other companies, notably Apple. It was Xerox, for example, which originally invented not only the graphical user interface, later introduced commercially by first Apple and then Microsoft, but also the mouse and ethernet network technology. By 2000, the business was close to collapse. A new management team fought back by relinquishing the low-end small office/home office market to focus on the middle-ground of enterprise office machines, and especially high-end mass-production imaging systems. It also successfully followed IBM's lead to establish a substantial business outsourcing and technology services division. In 2017, the outsourcing business was spun off as Conduent, leaving Xerox focused solely on the core document technology business. At the same time, pioneering CEO Ursula Burns stepped down in favour of Jeff Jacobson. Life has been more difficult since then. Since the 1960s, the group had operated in Asia through Fuji Xerox, a joint venture controlled by FujiFilm of Japan. With the main Xerox US & Europe business in slow but steady decline, Jacobson accepted a takeover offer from Fujifilm in early 2018 whereby the US company would be absorbed into Fuji Xerox. However that deal was blocked a few months later by a US court on grounds that it was not in the best interests of shareholders. That prompted the departure of CEO Jacobson; he was replaced by John Visentin. The two companies finally resolved their differences at the end of 2019 and agreed terms for a separation. Soon afterwards, Xerox launched an unsolicited approach to acquire tech giant HP, which was then almost four times larger by value. The subsequent slump in global stock markets forced Xerox to abandon its pursuit in 2020. A further change of strategy announced in 2021 involves the creation of five separate distinct units within the group offering different content management or technology services. That could ultimately lead to a break-up of the current group. Revenues for 2020 were $7.0bn, the lowest level since at least the 1970s, with net income of $192m. The business was founded in 1938 when patent attorney Chester Carlson developed a method for duplicating documents mechanically "to make office work a little less tedious". The process was acquired by what was then the Haloid Photographic Company, who launched it commercially in 1946, and later adopted the Xerox name.
Capsule checked 22nd June 2021
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Adbrands Daily Update 1st Apr 2020: In response to the current slump in global financial markets and the medium-term uncertainty over Coronavirus, Xerox abandoned its five-month pursuit of much larger technology giant HP. The likely recession ahead makes Xerox's debt-laden proposal entirely impractical. In addition, the sharp drop in stock markets has widened the gap between the two companies' valuations. Xerox's valuation has halved since February, making it now a sixth of HP's size rather than a third.
Adbrands Daily Update 5th Nov 2019: Xerox and Fujifilm settled the 18-month legal battle over their failed merger. The US company will sell its 25% stake in the Fuji Xerox joint venture to the Japanese group, as well as its majority stake in a separate joint venture that sells Xerox products to international partners. The net gain to Xerox from the two deals will be around $2.3bn. In return, Fujifilm agreed to drop its still-pending $1bn lawsuit. Xerox already has plans for its cash windfall: it has launched a takeover bid for the significantly larger hardware giant HP.
Adbrands Weekly Update 21st Jun 2018: Japanese company Fujifilm is suing the fading US tech pioneer Xerox for $1bn in compensation for walking away from their agreed merger earlier this year. Xerox had agreed to cede control of its US-based business to Fujifilm, already its longstanding partner in a wide-ranging joint venture across the Asia Pacific region. However, activist shareholders Carl Icahn and Darwin Deason sued to block that deal on grounds that it was not in shareholders' interests, and undervalued the company. Their case was upheld in a US court, even though the deal had been approved by the Xerox board. Fujifilm's suit points out that no other acquiror or offer has materialised since the merger was blocked and Xerox's market value has continued to decline. How therefore could their offer have undervalued the struggling company?
Adbrands Weekly Update 3rd May 2018: A US court placed a temporary injunction on the deal negotiated by Xerox CEO Jeff Jacobson to sell control of the company to its Asia partner Fujifilm. Activist investors Carl Icahn and Darwin Deason had requested suspension of the deal on grounds that it was not in shareholders' interest. The court accepted their argument, finding Jacobson "in breach of his fiduciary duties" because the deal was structured to favour his own position and that of certain members of the board. Indeed, Jacobson rushed the deal through last year despite having been told by a board majority not to proceed with it. Xerox attempted to reach a settlement with Icahn and Deason over the lawsuit, appointing their nominees as the company's new chairman and CEO, and replacing several directors who had sided with Jacobson. However that arrangement has still not been finalised. Fujifilm initially said it would revisit the terms of the deal in an attempt to resolve the situation. However, its own investors are also pressuring the company to abandon its attempts to acquire Xerox.
Adbrands Weekly Update 1st Feb 2018: In one of those end-of-an-era moments, US tech pioneer Xerox has accepted an offer to be acquired by its Asia Pacific partner Fujifilm. In a complex deal, Fuji proposes selling its 75% stake in their existing Asia joint venture to Xerox for $6.1bn, with which it will then acquire a 50.1% stake in the US company, to be renamed Fuji Xerox. However, the deal still requires the approval of Xerox shareholders, and in particular activist investors Carl Icahn and Derwin Deason, who together own 15% of the US company. They are thought to back such a merger in principle, but may push for a better price.
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