There was a short blurb about Xerox (NYSE: XRX) in the news on Monday. Management at the company wanted investors to know that it won't be needing to beg for the green stuff. Cash flow from operating activities, existing credit facilities, and a leaner business will carry the technology company through the current difficult period. Xerox gave a wide earnings range for 2009, saying it should book between $1 and $1.25 per share. Analysts are counting on $1.15 per share.
Well, that range makes it kind of difficult to predict how things will turn out in terms of whether the company will beat Wall Street or not; might as well flip a quarter. The more important thing to focus on is that Xerox will be profitable and that it is confident in its liquidity. The stock was up almost 18% at the close yesterday on nice volume. With the recent rally, should you look at Xerox as an investment, or a trade?
Xerox isn't one of my favorite stocks. I have no interest in it on a long-term basis. It just isn't a leading innovator these days, and there are way better alternatives out there if you want a core, long-term holding in the tech sector. Microsoft (NASDAQ: MSFT), Hewlett-Packard (NYSE: HPQ), and Apple (NASDAQ: AAPL) are three names off the top of my head I'd look at first.
Even though the market seemed to like Xerox's comments about its forecast and its current status, I would definitely not enter a trading position at these levels. I think a lot of the excitement in the stock was fueled by the general excitement of the day, with the Dow up almost 400 points and all.
If you did want to gamble with Xerox, waiting for a pullback is almost not even arguable here. That, and a tight stop.
If the market continues to go higher, I think Xerox will be pulled up along with it. But it's not a company I'm willing to bet on. It's one of those old-guard names that has had its day. It's still around, and its name is still iconic, but such facts don't sway me. I think the risk/reward characteristics of the other companies mentioned before are much more attractive.
Disclosure: I don't own any company mentioned; positions can change at any time.
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Reader Comments (Page 1 of 1)
11-25-2008 @ 6:53PM
Paul said...
Xerox isn't that innovative a company these days? I would strongly encourage that you check out what they are up to because the technology that they have out today is second to none in their industry. They developed a unit that erases the ink on the page over a 24 hour period - and you don't think they are innovative anymore?
Oh and by the way, the only reason why we are able to communicate this was is because Xerox invented the 1st personal computer and ethernet connection.
11-26-2008 @ 3:42AM
BHarrison said...
In comparison to so many other companies dire situations, being "the same old company" might not be so bad, huh?
12-02-2008 @ 7:39AM
Ant said...
Xerox is fine http://fine.freecities.com/fine-teen.html>fine teen
12-04-2008 @ 12:27PM
Craig Reinhardt said...
I am an ex Xerox employee. (1966-1985) I left when my job as a PTS was eliminated.
Up to that time we had the BEST technical field support group in the world. Then some idiot decided we could no longer "Afford" to give our customers great service. But then this was the same management that told a technical research developer from PARC to take his little "Notebook" computer and go home, he could keep it. As urban myth has it the review board said "No one would ever want a computer that small"(1972). This is the same leadership that bought a great small computer company (SDS) the best disk drive company in the world (Shugart) and the best printer company of the time and drove them all into the ground. unfortunately the people leading Xerox today have no more vision than those idiots. No, this is not the Xerox of 1966 to 1970., and it never will be again.
1-02-2009 @ 10:21AM
Sally said...
I am an ex employee (via a staffing company) of xerox, and although this was a short term employment, I realized from the very start Xerox was not the company for me. From day one I was told that I would not get hired, and that xrox has been on a hiring freeze for quite some time and things were tough in xrox land.
I had three different managers in my nine months with the company, that should tell you something also. Then when my time was up with xrox, I was devastated with this economy that I was laid off and they kept an employee that basically stole from the company, (hours not worked, lazy, not showing up for work and was a pathelogical liar. Although this employee had senority, and was needed by the new manager because he didn't know what he was doing. So here I sit day after day looking for work, and I was the one, who appreciated my job even through all the negativity and really like what I was doing and did a damm good job and was well liked by the client, this other person, who was not liked, did not work hard and took advantage of her employer keeps her job. How fair is that?
So should they go under? Their management is the worst (in my area) and their values are worse. The claim to have these 'work ethic values"! What a joke.