Xerox (XRX) CEO: Icahn Not Behind the Co.’s Split

Xerox Corporation (XRX) on Friday said it would split into two publicly traded enterprises, one holding its hardware operations and the other its business process outsourcing unit.

Xerox shares surged 5% in premarket trading immediately following the announcement.

Billionaire investor Carl Icahn is expected to get three seats on the Xerox services company board. He told CNBC that he had “several meetings with [Xerox CEO] Ursula Burns and applaud and respect her for doing what she believes shareholders want.”

The split is “a major move,” Icahn told CNBC “and will greatly enhance shareholder value.”

Meanwhile, Burns told CNBC that Mr. Icahn, who holds an 8.13% stake in the company, was not the driving force in the company’s decision announced today to split into two distinct companies.

“We are happy that he is in support of it, but he had nothing to do with the initiation, the contemplation, the analysis, or any discussion around the deal,” Burns told CNBC. “We are happy that he is in agreement with it, but he did not drive it, as is being reported in the news.”

Xerox announced Q415 earnings this morning. The printer and copier maker said it earned $0.32 per share, well above the $0.28 per share analysts were expecting. Revenue fell 7.6% YoY to $4.65 billion, below views for $4.74 billion.

On valuation measures, Xerox Corp. shares, which currently have an average 3-month trading volume of 8.51 million shares, trade at a trailing-12 P/E of 30.07, a forward P/E of 9.32 and a P/E to growth ratio of 9.72. The median Wall Street price target on the name is $12.00 with a high target of $16.50. Currently ticker boasts 7 ‘Buy’ endorsements, compared to 5 ‘Holds’ and 1 ‘Sell’.

Profitability-wise, XRX has a t-12 profit and operating margin of 1.95% and 5%, respectively. The $9.34 billion market cap company reported $1.36 billion in cash and cash equivalents vs. $6.3 billion in long-term debt in its most recent quarter.

XRX currently prints a one year loss of about 29% and a year-to-date loss of around 13%.

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