Xerox, the global copier and imaging giant, will pay $6.4 billion to acquire the outsourcing company Affiliated Computer Services, expanding its foothold in a growing industry, the companies said.
Xerox, based in Norwalk, Conn, is paying $63.11 a share in cash and stock for ACS, which posted revenue growth of 6% and new business signings of $1 billion in annual recurring revenue during its fiscal 2009.
“We’re creating a new class of solution provider,” Xerox’s chief executive, Ursula M Burns, said in a statement, adding that the deal was “a gamechanger for Xerox.” She estimated the company’s revenue from services would triple to $10 billion next year from $3.5 billion in 2008. Lynn R Blodgett, ACS’s chief executive, said in the statement that the deal was necessary “to expand globally and differentiate our offerings through technology.” ACS will continue to operate as an independent organization. Blodgett will remain as chief executive, reporting to Burns.
It was the first major deal for Burns, who took over Xerox in July with the retirement of Anne M Mulcahy.
Owners of ACS stock will receive $18.60 a share in cash and 4.935 Xerox shares for each ACS share. Xerox will assume $2 billion in ACS debt and issue $300 million of convertible preferred stock to ACS’s Class B shareholders. ACS had a market value Friday at the close of trading of $4.6 billion. Xerox said the transaction would add to profit in the first year on an adjusted-earnings basis.
ACS, based in Dallas, specializes in outsourcing processes for industries including telecommunications, retail and financial services and health care, and describes itself as the largest provider of managed services to government entities in the United States. The companies estimated the market for so-called business process outsourcing at $150 billion, growing at a rate of 5% a year.
JP Morgan Chase and Blackstone Advisory Partners acted as financial adviser to Xerox, while Citigroup Global Markets served as financial adviser to ACS
Agencies
Showing posts with label JP Morgan. Show all posts
Showing posts with label JP Morgan. Show all posts
Tuesday, September 29, 2009
Monday, May 18, 2009
Will Seagate layoff 1100 jobs?
Seagate Technology said that it plans to cut about 1,100 jobs from its workforce in a move the computer storage maker expects will reduce costs by about $125 million a year.
The job-cutting move, which affects about 2.5 percent of Seagate's workforce, is aimed at helping the company stay on track toward being cash-flow and earnings positive within its fiscal year 2010. It builds on a 10-percent reduction in jobs announced in January.
As a result of the new plan, Seagate, which competes with storage company Western Digital Corp, expects to take restructuring charges of about $72 million, primarily in the quarter ending in June.
Analysts said Seagate needs to make additional cost cuts like this, which may help it address debt obligations.
"The move will help the company avoid tripping its net leverage ratio debt covenant that was already renegotiated earlier this year," said JP Morgan analyst Mark Moskowitz, in a note to clients. "Seagate shares still face hurdles that could test investors' resolve in the slower summer months."
Seagate has been no stranger to restructuring in recent months as it deals with slow sales in the personal computer industry, which most others has seen demand shrink during the global economic downturn.
Back in December it said it would halt some operations during the holiday season and cut some 5 percent of its workforce.
About one month ago, on the same day that it reported disappointing quarterly gross margins, it eliminated its dividend.
The elimination of the quarterly dividend is expected to trim costs by about $60 million annually, the company said.
In January it replaced Chief Executive Bill Watkins, and Chief Operating Officer David Wickersham resigned. Chairman Stephen Luczo, who relinquished the CEO role to Watkins in 2004, has returned to the position.
Agencies
The job-cutting move, which affects about 2.5 percent of Seagate's workforce, is aimed at helping the company stay on track toward being cash-flow and earnings positive within its fiscal year 2010. It builds on a 10-percent reduction in jobs announced in January.
As a result of the new plan, Seagate, which competes with storage company Western Digital Corp, expects to take restructuring charges of about $72 million, primarily in the quarter ending in June.
Analysts said Seagate needs to make additional cost cuts like this, which may help it address debt obligations.
"The move will help the company avoid tripping its net leverage ratio debt covenant that was already renegotiated earlier this year," said JP Morgan analyst Mark Moskowitz, in a note to clients. "Seagate shares still face hurdles that could test investors' resolve in the slower summer months."
Seagate has been no stranger to restructuring in recent months as it deals with slow sales in the personal computer industry, which most others has seen demand shrink during the global economic downturn.
Back in December it said it would halt some operations during the holiday season and cut some 5 percent of its workforce.
About one month ago, on the same day that it reported disappointing quarterly gross margins, it eliminated its dividend.
The elimination of the quarterly dividend is expected to trim costs by about $60 million annually, the company said.
In January it replaced Chief Executive Bill Watkins, and Chief Operating Officer David Wickersham resigned. Chairman Stephen Luczo, who relinquished the CEO role to Watkins in 2004, has returned to the position.
Agencies
Saturday, January 3, 2009
US credit card cos losses could top $70 billion in 2009
Credit card companies have little to celebrate as many analysts brace for 2009 to be one of the worst years on record for consumer credit.
Losses for the industry could top $70 billion, but it is hard to predict how bad the pain will be.
US consumers have never before been so deeply in debt. There was nearly $1 trillion of credit and charge card debt outstanding as of October, up more than 25 per cent since 2003, according to the US Federal Reserve. That is in addition to $10.54 trillion in mortgage debt.
Unemployment, already at 15-year highs, is expected to rise to its highest levels since the early 1980s, when credit cards were not nearly as widespread.
In short, there's more debt than ever and fewer people are able to pay it.
"In many ways, we're in uncharted territory," said John Williams, an analyst at Macquarie Research.
Major credit losses are big trouble for Citigroup Inc, Bank of America, and other card issuers such as American Express Co and Discover Financial Services, which have seen their shares lose up to 80 per cent of their value in 2008.
The United States is not standing idly by. Citigroup received $45 billion of taxpayers' money in October and November. Bank of America has received $25 billion. American Express, which became a bank holding company, got approval last week to receive $3.4 billion from the taxpayer-funded Troubled Asset Relief Program.
Lenders, seeing potential big losses, are trying to protect themselves by tightening credit availability, which leaves consumers with fewer options.
This year's holiday shopping season was the worst since at least 1970, according to a report from the International Council of Shopping Centers.
"It is hard to see the light at the end of the tunnel," Williams said.
NOWHERE TO HIDE
No credit card company is safe. According to Citigroup analysts, more than one-fourth of the credit card portfolios of Citibank, Bank of America Corp, Capital One Corp, and Discover are subprime, which could lead to further losses.
Meanwhile, American Express is heavily exposed to troubled markets with high default rates such as Florida and California, and JP Morgan Chase & Co has to digest the portfolio of failed savings and loans company Washington Mutual.
Together, these six companies hold around 90 per cent of the total US outstanding credit card debt.
Citigroup and American Express have said they are tightening lending to mitigate their losses. JP Morgan and Bank of America declined to comment, while Capital One did not return calls seeking comment.
Credit card companies have reported increased losses. Discover, the No 4 US credit card network, posted worse-than-expected results in its fourth fiscal quarter, the first sign of the harsh deterioration of the industry, when the economic downturn picked up steam in October and November.
Discover almost doubled the money it set aside to cover credit losses. Analysts said its competitors would likely do the same in coming Credit Cards quarters, leading to lower earnings.
"Things have changed pretty rapidly in the last two months. I'm hopeful that we will see the worst in 2009, but I don't know yet," David Nelms, chief executive of Discover, told reporters in a recent interview.
Many analysts and credit card executives look at 2009 and remember the beginning of the mortgage crisis in early 2007, when lenders consistently underestimated what was coming up.
Said Chris Brendler, analyst at Stifel Nicolaus, "The risk is that things get much worse than expected."
Source: Agencies
Losses for the industry could top $70 billion, but it is hard to predict how bad the pain will be.
US consumers have never before been so deeply in debt. There was nearly $1 trillion of credit and charge card debt outstanding as of October, up more than 25 per cent since 2003, according to the US Federal Reserve. That is in addition to $10.54 trillion in mortgage debt.
Unemployment, already at 15-year highs, is expected to rise to its highest levels since the early 1980s, when credit cards were not nearly as widespread.
In short, there's more debt than ever and fewer people are able to pay it.
"In many ways, we're in uncharted territory," said John Williams, an analyst at Macquarie Research.
Major credit losses are big trouble for Citigroup Inc, Bank of America, and other card issuers such as American Express Co and Discover Financial Services, which have seen their shares lose up to 80 per cent of their value in 2008.
The United States is not standing idly by. Citigroup received $45 billion of taxpayers' money in October and November. Bank of America has received $25 billion. American Express, which became a bank holding company, got approval last week to receive $3.4 billion from the taxpayer-funded Troubled Asset Relief Program.
Lenders, seeing potential big losses, are trying to protect themselves by tightening credit availability, which leaves consumers with fewer options.
This year's holiday shopping season was the worst since at least 1970, according to a report from the International Council of Shopping Centers.
"It is hard to see the light at the end of the tunnel," Williams said.
NOWHERE TO HIDE
No credit card company is safe. According to Citigroup analysts, more than one-fourth of the credit card portfolios of Citibank, Bank of America Corp, Capital One Corp, and Discover are subprime, which could lead to further losses.
Meanwhile, American Express is heavily exposed to troubled markets with high default rates such as Florida and California, and JP Morgan Chase & Co has to digest the portfolio of failed savings and loans company Washington Mutual.
Together, these six companies hold around 90 per cent of the total US outstanding credit card debt.
Citigroup and American Express have said they are tightening lending to mitigate their losses. JP Morgan and Bank of America declined to comment, while Capital One did not return calls seeking comment.
Credit card companies have reported increased losses. Discover, the No 4 US credit card network, posted worse-than-expected results in its fourth fiscal quarter, the first sign of the harsh deterioration of the industry, when the economic downturn picked up steam in October and November.
Discover almost doubled the money it set aside to cover credit losses. Analysts said its competitors would likely do the same in coming Credit Cards quarters, leading to lower earnings.
"Things have changed pretty rapidly in the last two months. I'm hopeful that we will see the worst in 2009, but I don't know yet," David Nelms, chief executive of Discover, told reporters in a recent interview.
Many analysts and credit card executives look at 2009 and remember the beginning of the mortgage crisis in early 2007, when lenders consistently underestimated what was coming up.
Said Chris Brendler, analyst at Stifel Nicolaus, "The risk is that things get much worse than expected."
Source: Agencies
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