By Jacky Wong
(The Wall Street Journal)
People these days spend more time in offices googling and Skyping than xeroxing documents. That’s why Xerox, the once-mighty corporate titan, has had to look for ways to reinvent itself.
That may even mean the end of independence for the 111-year-old US company, which is now worth just $7.7 billion – around one-sixth of its value at its peak in 1999. Xerox is discussing possible deals with Japan’s Fujifilm, its longtime joint-venture partner, which may involve a change of control, according to The Wall Street Journal. No financial details have emerged.
If a deal does materialize, cost savings would likely be a major motivation. Growth has been elusive for Xerox’s printer and copier business – its sales for the first nine months in 2017 fell 5% from a year ago. The business, however, remains profitable with an operating profit margin around 12%. Streamlining operations between the two firms, which have a joint-venture called Fuji Xerox that sells copiers in Asia, would help support earnings even if revenue keeps declining.
Yet printers and copiers are unlikely to be the future of either company in a world where offices are getting more work done digitally, rather than on paper. Fujifilm, which has survived the death of film photography while its rival Kodak floundered, may be able to provide a lesson in corporate reinvention.
The company has been using its existing technology to diversify into new areas such as making cosmetics, a process which shares some underlying science with beautifying photos. Fujifilm has also made use of its imaging technology to manufacture medical systems, and has created a booming instant camera business to cater for the Instagram generation. Fujifilm’s operating income outside of its documents business grew 48% in the six months ended September, compared with a 28% decline for its document segment.
If Xerox could photocopy that kind of improvement in performance, a tie-up with Fujifilm would make sense.