Updated from 10:38 a.m. EST
said Friday that it would cut as many as 5,200 jobs, or reduce its workforce by more than 5%, as part of a worldwide restructuring.
The copier company said the restructuring would result in a $625 million pretax charge for the first quarter.
Stamford, Conn.-based Xerox said the overhaul of its operations, which includes shutting down plants, should result in savings of $95 million this year and $300 million in 2001.
The restructuring had been
expected, and Xerox rose slightly Friday morning, jumping 1/2, or 2%, to 27 1/16. (Xerox closed down 9/16, or 2%, at 26).
The company's layoffs represent an average 10% reduction in the number of upper and middle managers across the company's domestic businesses. Xerox employs some 94,000 people.
"While these are difficult actions for our people, Xerox can no longer operate business as usual and expect to win," said Rick Thoman, president and chief executive, in a statement. "We're intensifying our drive to become a faster, leaner and more flexible enterprise--able to respond swiftly and efficiently to customers' need with breakthrough technology and exceptional service."
The restructuring is the company's second in two years. The first, announced in November 1998, cost $1.1 billion and resulted in 9,000 layoffs. The company has yet to give the details of any substantive savings resulting from the 1998 restructuring.
The moves are designed in part to resuscitate the company's languishing stock price. The stock is down sharply from its high of 64 last May when company earnings fell short of Wall Street's expectations.
The announcement contains "initiatives that business are undertaking all the time without issuing press releases," said Gregory Gieber, analyst with
Brown Brothers Harriman
. "On the other hand, getting rid of your fat when you're overweight is a positive."
He rates the stock a long-term buy and a short-term neutral. "The stock is now priced as if it were a third tier company," he said. "People are pricing the company as if it were dead." Gieber also said if Xerox can execute the strategy it announced Friday and translate its restructuring into top-line growth, its stock should rebound.