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February 1, 1989


By CBR Staff Writer

Xerox Corp duly announced its expected reorganisation, which will lead to 2,000 people losing their jobs with the Stamford, Connecticut company – and on the computer side, Sun Microsystems Inc looks like being a major beneficiary of the reorganisation. It looked as if things were going Sun’s way at Xerox from announcements made towards the end of last year, but the company has now spelled it out, saying that it will phase out its own workstations in favour of ones made by Sun. Xerox had committed to using the Sun Sparc RISC in future products: it now looks as if it will buy in the finished workstations rather than just the Sun chips, making the decision much more valuable to Sun. Xerox lost money last year in electronic typewriters; document workstations; and medical image-making, which uses a proprietary Xeroradiography copying process. The largest part of the larger than expected fourth quarter charge of $275m pre-tax comes from writing off excess manufacturing capacity at its electronic typewriter plant in Fremont, California, and dumping the Xerox Medical Systems business in Monrovia, California – the two moves together will cost Xerox $140m. On Medical Systems, it says it will continue to provide service and supplies to existing customers. Another $100m of the charge is for reducing overhead and employment – the jobs to go are staff ones, rather than in sales or manufacturing – employement has already been reduced at the two California operations. On electronic typewriters, the company says that the market for cheaper and medium-priced ones has shrunk much faster than expected, leaving the industry with excess capacity. Sun gains because Xerox hopes to curb the losses in its document workstation business by gradually dropping its own workstations and switching its software over to Suns. The company also looks to make fundamental changes in the way it manages the business products and systems units, making them more responsive to market changes and strengthening the links between product development, marketing and research. A new Integrated Systems Operations will combine all Xerox document systems marketing activities, both in government and industry, on a worldwide basis. Also on the computer front, Xerox is following IBM’s lead, turning its government systems integration business over to the quest for commercial clients. Stripping out financial services, turnover in business products and systems rose 8% to $11,500m in 1988. The full figures are in Company Results, page five.

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