Xerox on Thursday announced that it will exit the small office/home office (SOHO) business segment, a move the company says will sharpen its focus and support its restructuring plan.
Xerox will discontinue its line of personal inkjet and xerographic products sold primarily through retail channels, the company said in a statement. However, the company will continue to provide service, support and supplies for its customers who own Xerox SOHO products.
The decision was necessary for Xerox to focus on its core office and production printing segments, which the company sees as higher-growth opportunities, said Paul A. Allaire, Xerox chairman and chief executive officer, in a statement. While Xerox was engaged in active discussions with potential equity partners, the slowdown in the economy and its adverse impact on the PC and SOHO markets prevented these companies from making what was once considered a compelling investment in Xerox's SOHO business, he said.
"Exiting the SOHO market will generate cash savings and improved earnings that are incremental to our previous expectations to return to profitability by the second half of 2001 and for the full year," said Anne M. Mulcahy, Xerox president and chief operating officer, in a statement.
In a short period of time, the market for the inkjet model has changed dramatically and the slowdown is expected to continue, Mulcahy said in her statement. In the first quarter of 2001, the company recorded a US$82 million pretax loss in its SOHO business. Revenue for the SOHO business was $139 million, representing 3 percent of total first-quarter revenue. Xerox said it expects the pretax SOHO operating loss for the second quarter to be similar to the first.
Xerox intends to sell its current inventory of SOHO products through existing retail and other channels worldwide.