Posts tagged: Strategy

Xerox Pushes the Reset Button

Jeff Hayes
 Jan 29, 2016

Making a big transformative acquisition is kind of like going to war – it’s expensive and risky and doesn’t always work out like the planners envisioned. CEO Ursula Burns announced that Xerox is retreating from its strategy to transform into a single growth-oriented, business process outsourcing (BPO) and technology company. Xerox LogoXerox intends to create two separate public companies – one focused on BPO and the other focused on Document Technology and Outsourcing – effectively undoing its $6.4B acquisition in 2010 of Affiliated Computer Services (ACS).

Much of Xerox’s vaunted technology never really gave ACS a big cost or innovation advantage over other BPO companies, and ACS never seemed to get much lift from accessing the Xerox customer base, especially outside the US.

Meanwhile the Document Technology business always seemed to get the short end of the stick. R&D budgets were cut, the growing managed print services business was moved over to the Services side of the house (at least for financial reporting purposes), and much of its cash flow was used to fund share repurchases, debt payment, and add-on acquisitions for the Services business. Xerox R&D Spending Read more »

xpedx + Unisource – Will Bigger Be Better?

Jeff Hayes
 Jan 31, 2014

International Paper (IP) and Unisource Worldwide (UWW) Holdings have announced a definitive agreement to merge their distribution businesses and form a newly created, publicly traded company that will be the largest paper distributor in North America.

This is a big deal. Two of the largest distributors of paper, board, and related supplies for the commercial printing and packaging industries are merging. It would be like Sysco and US Foods, UPS and Fedex, or Dunkin’ Donuts and Starbucks merging — OK, maybe not that big, but you get the idea.

The new xpedx/Unisource (unipedx? I hope not.) will have an unparalleled combination of product assortment, availability, logistics services, operational efficiencies, and, potentially, pricing power in the market. According to IP, the combined xpedx and Unisource business will have projected annual revenue in the range of $9 billion to $10 billion, and will have about 9,500 employees across more than 170 distribution centers in North America.

xpedx (blue) and Unisource (red) North American Locations

InfoTrends graphic from xpedx and Unisource data

Read more »

International Paper Closes Another Mill…Wake-Up Call for the Office and Commercial Printing Industry

Jeff Hayes
 Sep 16, 2013

International Paper announced it will permanently close its massive Courtland, Alabama mill by the end of the first quarter of 2014. This is a huge decision for IP and speaks very loudly about the long-term demand for printing and communications paper. Printer and copier manufacturers, inkjet and toner vendors, office products and supplies resellers, and print service providers need to take notice.

International Paper Courtland Alabama Mill

Source: Decatur Daily

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Staples Earnings Don’t Bode Well for Office Equipment & Supplies Industry

Jeff Hayes
 Aug 22, 2013

Staples’ most recent earnings announcement and efforts to reinvent itself suggest the office equipment and supplies business has entered a period of long-term decline. Vendors and resellers need to take notice and develop new strategies for growth.

Consider some of the financial highlights and comments from Staples’ conference call with analysts: Read more »

What Makes a Great Company? Ask Adobe Systems and International Paper

Jeff Hayes
 Jun 24, 2013

The April 2013 issue of the Harvard Business Review has an excellent article on the three rules for making a truly great company. Deloitte consultants Michael Raynor and Mumtaz Ahmed analyzed extensive financial and operational data on more than 25,000 publically traded companies over a 45-year period and identified only 170 companies that qualified as a “Miracle Worker”. These companies were in the top 10% in Return on Assets (income divided by book value of assets) for a long enough period of time (either 16+ years for companies with 45 years of data or all 10 years for companies with just 10 years of data) to be more than just a random result.

After looking at the strategic choices over decades of success made by the “Miracle Workers” the analysts boiled down the choices to three elementary rules: Read more »

Xerox and EFI – Making the Transformation

Jeff Hayes
 Jan 25, 2013

Xerox and EFI announced their 4Q 2012 earnings yesterday. Both companies continue to execute on strategies to transform, but are moving in different directions. There are lessons to be learned for the industry.

Xerox – Services for Growth, Technology for Profit

Xerox has made it very clear that they in the midst of a shift to a Services-led strategy. The company is managing its Technology business for profits and cash generation by lowering the cost basis and investing in services areas.

Xerox CEO Ursula Burns opened the earnings call by saying “Xerox is a company going through a seismic transformation.” The financial results show how far Xerox has transformed. The Services segment of the company grew 7% and is now 52% of the business and the Technology segment declined 8% and is now 48% of total revenue. For the first time, Xerox generated more in profits from Services than from Technology.

Read more »

Newsweek Bails on Print … 5 Billion Pages Gone

Jeff Hayes
 Oct 18, 2012

Newsweek, the venerable 79-year-old weekly magazine announced it will discontinue its print edition to become digital-only by the end of the year. The publication has been struggling for years with circulation dropping from over 4 million in 2003 to around 1.5 million in 2012. By my estimate the decision will eliminate approximately 5 billion 8.5×11 equivalent pages from the printing industry and 79 million pieces of mail per year.

Tina Brown, Newsweek’s editor-in-chief, broke the news on The Daily Beast which is also controlled by IAC/InterActiveCorp. Ms. Brown, in explaining why the publication is going digital-only stated, “This decision is not about the quality of the brand or the journalism–that is as powerful as ever. It is about the challenging economics of print publishing and distribution.”

Ahhh, how quickly people change their views. Less than two years ago when IAC/InterActiveCorp CEO Barry Diller was finalizing negotiations Read more »

The Need for Transformation at Staples, Office Depot and OfficeMax

Jeff Hayes
 Sep 17, 2012

Staples, Office Depot and OfficeMax have been in the news lately for declining revenue and profits. The office superstores (OSS) face an immense challenge to transform as there is less demand for some of their biggest sources of profit (ink and toner cartridges) and less use of one of their biggest assets (retail stores). How they pivot at this point will likely determine their direction for years to come.

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Diapers and iPads – Signs of the Time for Printing and Paper

Jeff Hayes
 Aug 14, 2012

As a father of four children, I often get insights about the meaning of life and the future of the printing industry from seemingly innocuous experiences and items that cross my desk. (Sorry, I’m an analyst. I can’t help myself.) This week it was an update on International Paper’s Franklin Mill and a letter from the principal of my son’s middle school (don’t worry, he’s not in trouble) that I believe are prescient on the direction of much of the paper and printing industry.

Less Freesheet, More Fluff Pulp

Back in October 2009, during the depth of the economic recession, International Paper (IP) made the difficult decision to close its Franklin, VA mill that produced over 600,000 tons of uncoated freesheet paper used for printing and copying (nearly 20% of IP’s capacity) and 140,000 tons of coated paperboard used for book covers, greeting cards, direct mail advertising and other products (7% of IP’s capacity). The closure resulted in over 1,100 job terminations and was extremely painful for the community of Franklin (population 8,600) who’s history was inextricably linked to the Camp family and Union Camp paper mill.

International Paper Franklin Mill

Diane Mathews, Daily Press / October 5, 2010

IP’s chief executive John Faraci recently commented to the Wall Street Journal that during the recession, copy paper demand in North America “stopped overnight”. “We had no choice,” he said. “We didn’t have any orders.”

I believe many CEOs in the printing, office equipment, and paper industries were having a similar experience at that time.

Read more »

SmartPhones, Tablets and the Collapse of Print

Jeff Hayes
 Mar 1, 2012

A couple items caught my eye this morning as I read the Boston Globe … on my iPad. I still subscribe to the paper edition of the Globe. I have enjoyed reading it over breakfast ever since I was a paper delivery boy back in the 1970’s. But it was raining quite hard this morning and I was running a few minutes late, so instead of going down to get the paper I pulled out my iPad and perused a variety of sites.

At the site The Atlantic was a blog titled “The Collapse of Print Advertising in 1 Graph“. After looking at the chart my reaction was - Holy Schlitz!

Read more »

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