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Xerox CEO Turnaround Plan Fails Again

Douglas A. McIntyre

If there was ever a time that the Xerox Corp. (XRX) board needed to throw out CEO Ursula Burns, it is now. The overpaid executive has failed again to make the turnaround she has repeatedly promised. Shareholders dumped the stock just after third-quarter earnings were announced, pushing it down almost 9%.

Xerox's shares were beaten down by another less-than-mediocre quarter. However, Burns, as usual, tried to make the results seem strong:

This quarter shows how we are successfully capturing the benefits of a diversified portfolio. Within services we continue to focus on improving our cost structure while maintaining investments in areas where we see opportunity, such as healthcare. In document technology, revenue declines stabilized with continued good profitability. We continue to see demand from small and midsize businesses in the United States, and positive trends in the high end of our business.

Nothing could be further from the truth. Revenue fell 1% to $5.26 billion. Net income was up 2% to $286 million. Results for the first nine months of 2013 were just as bad.

Burns, who miraculously made the Fortune "50 Most Powerful Women in Business," also made the magazine's list of the 25 most highly paid women, with total compensation of $9,976,466 in 2012.

Xerox shareholders have suffered for years. Over the past five, the S&P 500 is up by 80%, compared with Xerox at only 38%.

Guidance, by the way, was worse than expected:

Xerox expects fourth quarter 2013 GAAP earnings from continuing operations of 24 to 26 cents per share and adjusted EPS of 28 to 30 cents. Our guidance includes approximately 2 cents per share of restructuring charges and 2 cents from higher pension settlement expenses. The company expects full-year 2013 GAAP EPS from continuing operations in the range of 93 to 95 cents, and adjusted EPS of $1.08 to $1.10.

In other words, there is no reason to believe things will get any better.