The rebranding of Global Imaging Systems to Xerox Business Solutions and the subsequent consolidation of former GIS branches were surprising but not shocking.
(Editor’s note: This is the third in a series of articles written by The Cannata Report team on the latest developments taking place with Xerox and Xerox Business Solutions (XBS), the former Global Imaging Systems (GIS).)
A few years ago, a dealer from any city U.S.A. (the name of the city has been omitted to protect the dealer) was sold to Global Imaging Systems (GIS). After the sale, he and his employees remained, operating a successful business and serving long-time customers as they had as an independent operation.
That changed in early January when Xerox notified him that his GIS branch was being consolidated along with other GIS branches in the region into a single regional GIS business unit. In a cruel twist of fate, that entrepreneur who had built a successful business and developed many close customer relationships, was now out of a job. Fortunately, many of his employees were assigned roles in the new consolidated XBS organization.
“They’re taking us and other companies that still have their past presidents and we’re just gone off the face of the Earth,” observed the dealer who spoke off the record.
We asked him, coincidentally his last day on the job, how customers were handling the news.
“Most don’t even know,” he said. “It happened so quick and they implemented it so fast, all you had time to do was get your bags packed.”
Before leaving he had to sign a five-year non-compete for the market where his GIS branch was located.
A similar scenario took place across other GIS markets throughout the United States as the transition from GIS to Xerox Business Solutions (XBS) took place. This was happening at the same time Xerox was continuing to make sweeping personnel cuts across all segments of its organization, eliminating well-compensated vice presidents from its ranks.
Our source tells us he had a sense of foreboding when Carl Icahn was appointed to the Xerox Board of Directors a few years ago, but he never would have envisioned this scenario.
“If I had known Carl Icahn would come in and take over Xerox, and Global as it exists today, would go away, I would have lost a big bet when I was acquired,” he said.
He understands Xerox was in trouble and something had to be done even though GIS was still a highly profitable segment of the business, which he felt offered a modest sense of security.
“I don’t have the iron balls they do to do this this deep—but Xerox needed some work and these guys are the cartel capable of doing it,” he acknowledged. “I shouldn’t say capable, because that’s still to be seen, but they are flattening this organization and making tough decisions to try and resurrect and reshape Xerox.”
We also approached another individual who once worked for Xerox but is now employed in the independent dealer channel.
“I am not surprised. I worked with Xerox for many years and touched many facets of the business on a national scale but even so I would say there are less than 10 people I worked with throughout my career who are still with the company. Xerox leadership has made some very poor decisions in the last 15 years that has created an unstable and toxic work environment. Most of their best talent, even the most loyal, have cut bait. It’s really sad. Xerox was once a great company and a great place to work.”
He added, “Xerox has relied on short term thinking by trying to outrun revenue decline with extreme cost cutting. The problem is that eventually that cost cutting hampers your ability to deliver contracts and grow revenue. It’s a snowball that has been spiraling out of control for over a decade.”
Are these moves, some clearly necessary, done with the intent of restoring Xerox to its former glory or to repackage it for sale?
Rumors are circulating around a potential sale and one name that keeps emerging as a potential suitor is HP. That’s not beyond the realm of possibility after the company’s 2018 acquisition of Apogee Corporation in the UK. The Fujifilm deal might still happen too, and there are many who give this scenario the best odds. Meanwhile, a long-time dealer with no skin in the game, told us he wouldn’t be surprised if a private equity firm acquired Xerox.
“The attractive thing about our industry for private equity is that we have a predictable revenue stream and an aftermarket that generates lots of cash,” he opined.
He wasn’t surprised by what happened with GIS.
“The writing was on the wall once Xerox bought them,” he observed. “You look at the history of the copier industry, once that happens, it’s over.”
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