Xerox Corp. (XRX) recently announced that one of its fully owned subsidiaries, ACS, has acquired Symcor’s U.S. operations, marking Xerox’s expansion in the financial services industry.
Symcor is one of North America’s largest outsourcers of financial processing services with products ranging from item processing, statement processing, statement production to cash management services. With the replacement of paper-based operations in the financial institutions with the electronics system, most of these institutions are urging for a central services provider.
With the acquisition, Xerox aims at serving both its existing clients and Symcor’s clients with its broad portfolio of financial servicers.
Xerox has pursued a number of acquisitions in the current year, aimed at capitalizing on the growing markets (both domestic and foreign) in order to strengthen its financial performance in the upcoming quarters. Some important acquisitions include Xerographic Solutions, Education Sales and Marketing, LLC, Midwest Business Solutions Inc., Premier Office Equipment Inc., United Business Solutions, Florida Imaging & Network Systems, Bennett’s Business Systems, Inc. and XL World.
In the last reported quarter, Xerox recorded an adjusted net income of $393 million or 27 cents per share compared with $342 million or 24 cents per share in the year-ago quarter. Revenues increased marginally by 2% year over year to $5.61 billion, driven by lower sales. The company expects to witness better performance going forward based on its attempt to grow and expand its business, particularly Business Process Outsourcing.
Consequently, Xerox has projected adjusted earnings in the range of $1.07 to $1.12 per share for full-year 2011. However, intensifying competition and availability of substitutes for the company’s products have put the company on the back foot.
Thus, the shares of Xerox Corp. are maintaining a Zacks #3 Rank, which translates into a recommendation of Hold for the short term (1 to 3 months) and we reiterate our recommendation of Neutral for the long term (more than 6 months).
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