I see revenue now on a 5% to 15% decline over the last 12 months and accelerating (no surprise) and costs only out-matched by a decline in costs (us). At some point, likely in 2020, there won’t be any more costs to cut (except for John’s salary!). Also, the spread between operating income and expenses as widened, likely from the Xerox’s hard push to demand payment for services within 30 days while not paying bill until +90. I do wonder if the decision not to sell the customer financing business is because the one-hit boost in money from selling the business would not cover-up the immediate, sharp decline in revenue that this business generates. The statement of ‘Focus investments in growing market segments such as AI and IoT’ looks to be bogus as there is no indication of new spending in R&D, M&A or people (LOL). Almost as alarming, I also do not see the company addressing the big debt note it has coming due in 2020, which is going to be very costly due to Xerox’s junk bond status (Moody’s rating is Baa3 as of December). In addition, the statement that ‘~$775M of the $1.2B net unfunded is attributable to certain plans that do not require funding, Overall net global funded status of ~88%’ is a complete farce. Take-out the foreign pensions, which have different funding rules, and the non-qualified executive pensions in the US, which are always unfunded, and the result is that RIGP is likely under 80% funded already; but it won’t be official until 2020. Overall, the extra money that Xerox is generating looks to be all going into buybacks, which looks good on paper and even better to the computers that do a lot of the trading for institutional investors as they look at the ratios and not the underlying data driving results. As other people said, it’s like the owner of White Star Lines telling passengers, i.e. investors, that the Titanic if perfectly safe after hitting the iceberg while he’s running for the nearest lifeboat.
Great informative post from @11LYmWDk-1vip.