Xerox Rebound Continues As It Restores Dividends

Xerox' long road back from its near-death experience hit a new milestone Monday, as the Stamford, Conn.-based document technology company restored shareholder dividends for the first time in six years.

In a statement, the company said it would pay out 4.25 cents per share to stock holders of record on Dec. 31. The dividend will be paid on Jan. 31, 2008, Xerox said.

"Declaring a dividend and our continued share repurchase initiatives reflect the health of our business and our belief in the long-term value we're creating for Xerox shareholders," Xerox Chairman and CEO Anne Mulcahy said in a statement. Mulcahy said the company has "significantly strengthened our financial position" to enable such a dividend.

Xerox' action flexes new muscle at a time when competitors, notably Lexmark, continue to grapple with a printer and imaging market caught between low-margin ink jet technology and higher-margin laser printing. Xerox has made inroads this year in the solution provider channel, after launching a new initiative with SMB-focused resellers and putting weight behind its PagePack solution to drive growth - - through the channel - - of its consumables.

During its most recent quarter, Xerox registered 12-percent top line growth that was led by its color document products and the company raised its annual revenue target for Wall Street. During a call with analysts to discuss that quarter, Mulcahy brushed off a suggestion that Xerox consider acquiring Lexmark, saying such a deal wouldn't likely benefit Xerox.

The restoration of a dividend payment comes six years after dividends were halted in light of accounting irregularities that had developed under a previous administration at Xerox. The company wound up paying $10 million to settle charges and restated earnings. The company was so devastated at the time, questions emerged as to whether Xerox could even survive; Mulcahy restructured Xerox after taking over the CEO post, leveraged its color document technology into a refreshed product line, and earlier this year vowed to build up its business through the channel.

Some solution providers, though, have questioned Xerox acquisition this year of Global Imaging Systems, a Tampa, Fla.-based document technology solution provider, suggesting it would create channel conflict. Xerox executives have said they would work to minimize any conflict, saying the market was large enough to provide growth opportunities for its channel partners even after the acquisition.

Xerox was slated to conduct its annual investor conference later on Monday.

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