Tuesday, May 29, 2012

Xerox On Lexmark: Ahead Of The Pack, But Not Us

Both Xerox and Lexmark have been discussed on this site as potential value investments, and their stocks continue to languish. Investors looking to learn more about either or both companies should take a look at Xerox's latest conference call.

A large part of company conference calls can be rather useless for investors. Between management's reading out loud of the income statement (is this really necessary?) and many questions about the company's short-term direction (e.g. "how are sales trending in the first three weeks of the new quarter?"), there are probably better ways to spend one's time. But occasionally, some tidbits are discussed which can really help the investor understand the competitive landscape, as occurred on Xerox's latest conference call.

First, a great question from analyst Bill Shope:

"Ursula, I was wondering if you can walk us through your latest read on the competitive landscape within document outsourcing. All of the key players continue to tout competitive momentum here. So it's a bit tough, for us on the outside, to see which vendors are really breaking out as long-term leaders. So if can give us your perspective on that, that'd be helpful."

CEO Ursula Burns responds:

" I would speak about 2 companies outside of the other group. So the other group is Canon, Ricoh, KM [Konica Minolta], the normal technology people, technology hardware providers, and they are still infants in document outsourcing. They're really not large players. They are trying to get together solutions and offer them, but we really don't compete actively against them. The places that we -- the competitors that we compete actively against are HP, Lexmark and us. Those are the 3 people who are in this document outsourcing business, today, as mature players. I'll break out HP, of those 3, as behind both Lexmark and Xerox."

In the ensuing discussion, Burns describes the types of markets/industries Lexmark and Xerox dominate respectively, along with some of the strengths and weaknesses of each company's managed services offering.

Investors interested in reading the call's entire transcript can do so here.

Disclosure: Author has a long position in shares of LXK

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