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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Sergio H who wrote (50337)	12/13/2012 12:38:34 AM
From: Spekulatius	2 Recommendations Respond to of 78531

Re XRX - I went through the latest CC posted an seekingalpha. I found 3 points of concern, beyond the fact that they have missed their earnings number basically 4 times in a row. 1) they factorized receivables, which gave the, 300M$ in immediate cash flow and which increased their earnings number by 1c/share. One analyst question them on that, because this is commonly used with cash flow challenged companies or to manage earnings. The answer was some mumbo jumbo about funding diversifications, which does not sound sufficient to me. 2) They have significant margin pressure in their service business and attribute this with the fact that lucrative add on's to the LT contractual terms are harder to get. Sounds systemic to me and may be attributable to the fact that the customers don't believe they are getting a good value with these add on's from Xerox. hat concerns me specifically that they don't seem to get add on even in hot areas like Medicaid fraud. Maybe other companies getting these add-on business, because someone is apparently doing this work. 3) XRX mentions 6% growth in their service business, but it is not clear how much of this is organic, because they keep spending money on acquisitions? Besides that, service is just 52% of the business; the equipment business makes up the rest. There are other areas of concern, like the significant gap between. Non GAAP and GAAP earnings (approx 0.04-0.05$/quarter, which is due to amortization, needs to be looked at too. It's clear that XRX screens cheap, but you mentioned before that this is not enough. I think there are good reasons, why the market discounts XRX numbers, imo.