NEW YORK (TheStreet) -- Xerox Corp. (XRX) - Get Report stock closed up by 5.63% to $9.75 on heavy trading volume on Friday, after the company announced it plans to split into two publicly traded companies.
The split will create an $11 billion document technology company and a $7 billion business process outsourcing company, the Norwalk, CT-based company said in a statement this morning. The separation could save the companies $2.4 billion during the next three years.
"Short-term Xerox should get some boost," Anurag Rana, an analyst with BloombergIntelligence, told Bloomberg. "The long-term value for these companies will be how it redefines its services in a cloud-first and mobile-first world. Xerox is not known to be at the forefront of those movements."
Activist investor Carl Icahn, who owns a stake in Xerox, will appoint three board of directors to the new Business Process Outsourcing company's board. Additionally, Xerox's board will begin searching for a CEO of the outsourcing company.
The separation should be completed by the end of 2016, Xerox said.
As of the market close on Friday, 17.83 million shares of Xerox have traded, well above the company's 30-day average of 8.66 million shares.
Separately, recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
TheStreet Ratings rates this stock as a "hold" with a ratings score of C. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.
You can view the full analysis from the report here: XRX