Background of Xerox’s Organizational Changes
In October 2023, Xerox Holdings Corporation launched a major organizational overhaul called “Reinvention.” This included shifting to a new operating model, consolidating teams under a “Global Business Services organization” and a significant layoff of 15% of its workforce. The changes were intended to improve the company’s business structure but faced early challenges. In January 2024, Xerox detailed its “operating model evolution,” further emphasizing restructuring.
Impact on Operations and Financials
The impact of Xerox’s transformation became apparent on April 23, 2024, when the company reported a 12.4% year-over-year drop in quarterly revenue, including a 25.8% decline in equipment sales. In part, the company attributed this decline to “geographic simplification,” which it acknowledged had disrupted sales operations. Despite assurances of future benefits from the new operating model, Xerox shares fell by 10.1% from $16.42 on April 22 to $14.76 on April 23.
Continued Financial Struggles and Further Decline
On October 29, 2024, Xerox posted disappointing third-quarter results for 2024, missing analysts’ expectations and lowering its financial guidance. The company cited delays in the global launch of new products, lower sales force productivity, and postponed cost-cutting measures as reasons for the poor performance. As a result, Xerox shares dropped by 17.4%, from $10.28 on October 28 to $8.49 on October 29.
Allegations of Misleading Statements
Kirby McInerney LLP has filed a securities class action alleging that Xerox’s executives made misleading statements and failed to disclose key information during the Class Period. Specifically, the lawsuit claims that Xerox did not reveal the full impact of the workforce reduction on its sales operations, product sales, and overall revenue. The firm asserts that these omissions misled investors about the company’s financial health and prospects.
