Updated from 2:33 p.m. EDT
Rick Thoman, chief executive of struggling
, quit under pressure from the company's board Thursday, only 13 months after he took the postion.
Thoman, who has been widely blamed by shareholders for Xerox's sluggishness to move into high-tech digital imaging products, will be replaced by Paul Allaire, the company's chairman and former chief executive.
Following early reports of Thoman's departure, shares of Stamford, Conn.-based Xerox fell 2 points, or 7.3%, to close at 25 1/2. The company formally announced the move after the stock market close, and the stock recovered slightly in after-hours trading, rising to 25 3/4, according to
In his first stint as chief executive, Allaire had hand-picked Thoman, then chief operating officer of
, to be president and chief operating officer of Xerox in June 1997. After working closely and prepping Thoman for the position, Allaire named him chief executive in April 1999.
Since then, Xerox has been troubled by falling sales and profits, and its share price has fallen by roughly half. From its high near 64 in May 1999, it started falling when the company's earnings fell short of expectations.
Most recently, the company reported a first-quarter loss of $243 million and announced it would cut 5,200 jobs and shut down plants at a cost of $625 million. It was the second restructuring in two years. The first restructuring, announced by Allaire in November 1998, cost $1.1 billion and resulted in 9,000 layoffs.
"When you are dealing with situations like low stock prices and heavy restructuring efforts, and things aren't going quite as planned, it's easy to get feathers ruffled. Its quite possible that there just wasn't enough patience in the organization to see if Thoman's turnaround efforts would work," said Gregory Gieber, analyst at
Brown Brothers Harriman & Co
. He rates the stock a long-term buy and a short-term neutral.
The company plans to brief reporters and analysts about its management reshuffling in a conference call Friday morning at 8:30 a.m. EDT.
Thoman's efforts with Xerox involved trying to push the No. 1 copier maker into markets for both home and office digital products, pitting it against old copier rivals, such as Japan's
, and home-imaging equipment makers such as
Along with his cost-cutting efforts and a push toward digital home and office equipment, Thoman also worked to revamp the company's sales force, trying to shake the image of stereotypical copier salesmen in polyester suits in favor of forming a sales force versed in high-technology digital products.
But his efforts seemed to fall short of Allaire's expectations. "We are grateful for Rick's contributions in leading the company through a period of major repositioning," Allaire said in a release. "However, both Rick and the board felt it best for the company to move forward with an experienced Xerox team that will lead Xerox people and efficiently execute the strategy."
Xerox separately promoted Anne M. Mulcahy to become the company's new president and chief operating officer and elected her to the board of the company. Mulcahy, a 24-year employee of Xerox, most recently served as president of the company's general markets operations.