Xerox

For xerox as a verb, check the Trademark issues section.

Xerox Corporation Template:Nyse is the world's largest supplier of toner-based (dry ink) photocopier machines and associated supplies. Corporate headquarters are in Stamford, Connecticut, though the major portion of the company is located in and around Rochester, New York, the area in which the company was founded. The company is so identified with its product that the term "Xerox machine" is often used to refer to photographic duplicators produced by other companies.

Originally named Haloid and beginning as a manufacturer of photographic paper and equipment, the company came to prominence in 1959 with the introduction of the first one-piece, plain paper photocopier using the process of xerography (electrophotography), the Xerox 914. The company expanded substantially throughout the 1960s, making millionaires of some long-suffering investors who had nursed the company through the slow research and development phase of the product. In many ways, this time resembled the early years of Microsoft. Proceeds from the introduction of this new industry allowed the company to open a famous research center, the Xerox Palo Alto Research Center or Xerox PARC.

Business model shifts

Xerox shifted its business model in the 1970s and 1980s as patent expiry removed exclusivity from their copier technology, and diversification plans largely did not succeed. Many technologies developed largely by PARC were ignored by Xerox and made their way into other companies' products—for instance, Ethernet, the WIMP interface, and laser printers. Plans to enter the computer market were destroyed by bad timing (for example, releasing an 8-bit CP/M based system, the Xerox 820, just as IBM readied its more advanced PC). Similarly, Xerox developed a line of advanced typewriters just as the typewriter began to lose out to computer-based word processing. Meanwhile, the company's manufacturing costs were far in excess of those of their Japanese photocopier competitors, its design and manufacturing quality became questionable, and its internal culture had become problematic.

The company was revived in the 1980s and 1990s, through improvement in quality design and realignment of its product line. Development of "digital photocopiers" in the 1990s and a revamp of the entire product range—essentially high-end laser printers with attached scanners which were able to be attached to computer networks—again gave Xerox a technical lead over its competitors. Xerox worked to turn its product into a service, providing a complete "document service" to companies including supply, maintenance, configuration, and user support. To reinforce this image the company introduced a corporate signature, "The Document Company®" above its main logo and introduced a red "digital X®". The "digital X" symbolised the transition of documents between the paper and digital worlds.

Xerox also markets software such as DocuShare and FlowPort, offers consulting services and printing outsourcing. To improve its position in the office printing market it purchased the printer division of Tektronix in 2000.

Office paper

Although not a manufacturer, Xerox is a significant player in the development and supply of office paper. From the early days of the photocopier the company found it necessary to work with paper mills to ensure an array of products were available that took advantage of the improving speed/image quality capabilities of their machines. The heat, electrical charge and toner used in the xerographic process often means traditional offset papers are not optimised. The company has media laboratories in the United States and United Kingdom.

Colour Impressions, a paper targetting the growing office color market was created in 2004. In January 2005 the first carbonless paper suitable for digital color printers was launched [1] (http://www.xerox.com/go/xrx/template/inv_rel_newsroom.jsp?ed_name=NR_2005Jan20_CarbonlessPaper&app=Newsroom&view=newsrelease&format=article&Xcntry=USA&Xlang=en_US).

A 2004 survey [2] (http://www.paperloop.com/inside/stories/wk01_17_2005/79.html) rated Xerox as the leading European office paper brand.

Accounting irregularities

On April 11, 2002, the Securities and Exchange Commission filed a complaint (http://www.sec.gov/litigation/complaints/complr17465.htm) against Xerox. The complaint alleged Xerox deceived the public between 1997 and 2000 by employing several "accounting maneuvers," the most significant of which was a change in when Xerox recorded revenue from copy machine leases — recognizing a "sale" in the period a lease contract was signed, instead of recognizing revenue ratably over the entire length of the contract. The issue was when the revenue was recognized, not the validity of the revenue. Xerox's restatement only changed what year the revenue was stated.

Prior to 1997, Xerox had recognized revenue from equipment (copy machine) rentals, or leases, as required by U.S. generally accepted accounting principles (U.S. GAAP). U.S. GAAP (specifically FAS 13) prohibits companies from recognizing the entire proceeds of the sale of equipment unless certain criteria are met, such as transfer of ownership. If none of the criteria are met, the "sale" is considered a lease, and only the rental payments owed to the company in the current period can be treated as revenue in the current period.

The SEC charged that the change in how Xerox applied accounting principles not only violated GAAP, but was intentionally designed to fool Wall Street into believing the new management team was working wonders, exceeding Wall Street's expectations nearly every quarter from 1997 through 1999. The SEC further charged that the accounting irregularities increased fiscal year 1997 pretax earnings by $405 million, 1998 pretax earnings by $655 million, and 1999 pretax earnings by $511 million (in each quarter of each year, earnings were inflated just enough to exceed the Wall Street's First Call Consensus EPS).

The SEC also alleged that Xerox's senior management was aware of, either by directing or approving, the accounting actions that were taken for the purpose of what management called "closing the gap" to meet revenue and profit goals. When Xerox's auditors, KPMG, questioned the legitimacy of the company's accounting practices, senior management requested that a new partner be assigned to its account. In order to keep the relationship with Xerox that had lasted nearly 40 years, and to protect the $82 million in audit and non-audit fees KPMG would collect from Xerox between 1997 and 2000, KPMG complied with management's request.

Of course, fool's gold becomes tarnished quickly, and the deception employed by Xerox's management soon came to light. The "accounting tricks" employed by Xerox were a double-edged sword: by accelerating future revenues into present periods, it became increasingly difficult for management to meet investors' expectations in future periods, especially as the economy began to worsen in 1999 and later years.

In response to the SEC's complaint, Xerox Corporation agreed to pay a $10 million penalty and to restate its financial results for the years 1997 through 2000. On June 5, 2003, six Xerox senior executives accused of securities fraud, including its former chief executive officer, Paul A. Allaire and G. Richard Thoman, and its former chief financial officer, Barry D. Romeril, agreed to pay $22 million in penalties, disgorgement, and interest.

On January 29, 2003, the SEC filed a complaint (http://www.sec.gov/litigation/complaints/comp18389.htm) against Xerox's auditors, KPMG, alleging four partners in the "Big Five" accounting firm, Michael A. Conway, 59, Joseph T. Boyle, 59, Anthony P. Dolanski, 56, and Ronald A. Safran, 49, permitted Xerox to "cook the books" to fill a $3 billion "gap" in revenue and $1.4 billion "gap" in pre-tax earnings. As noted in the complaint: "There was no watchdog at Xerox. KPMG's bark sounded no warning to investors; its bite was toothless." In April 2005 KPMG settled with the SEC by paying a $22.48 million fine [3] (http://www.democratandchronicle.com/apps/pbcs.dll/article?AID=/20050420/BUSINESS/504200309/1001). As part of the settlement KPMG neither admits nor denies wrongdoing.

Xerox ModiCorp, recently renamed Xerox India, has been investigated for making "improper payments" in order to obtain government orders. [4] (http://www.forbes.com/infoimaging/feeds/infoimaging/2005/01/24/infoimagingasiapulse_2005_01_24_ix_3744-0083-.html)

See also: Accounting scandals.

During settlement with the Securities and Exchange Commission, Xerox began to revamp itself once more. As a symbol of this transformation, the relative size of the word "Xerox" was increased in proportion to "The Document Company" on the corporate signature and the latter was dropped altogether in September 2004, along with the digital X. However, the digital X and "The Document Company" are still used by Fuji Xerox.

Corporate structure

Although it is a global brand, Xerox has a slightly unusual corporate structure in that it maintains a joint venture, Fuji Xerox, with Japanese photographic firm Fuji Photo Film Co. to develop, produce and sell in the Asia-Pacific region. Fuji Photo Film Co. is currently the majority stakeholder, with 75% of the shareholding.

The company's European operation, Rank Xerox has been fully owned by Xerox Corporation since 1997. The Rank Xerox name was discontinued following the buyout.

Xerox India is an Indian subsidiary derived from a joint venture formed between Dr Bhupendra Kumar Modi and Rank Xerox in 1983. Xerox Corp. obtained a majority stake in 1999 and aims to buyout the reamaining shareholders [5] (http://economictimes.indiatimes.com/articleshow/1063566.cms).

Diversity

Xerox received a 100% rating on the first Corporate Equality Index released by the Human Rights Campaign in 2002. They have maintained this rating in 2003 and 2004.

Trademark issues

The success of the Xerox brand has led to the terms "a xerox", "to xerox", "xeroxed", and "xeroxing" being used synonymously for the product/act of photocopying. The company does not condone such uses of its trademark, and is particularily concerned about the ongoing use of Xerox as a verb as this places the trademark in danger of being declared a generic word by the courts. The company is engaged in an ongoing campaign to convince the public that Xerox should not be used as a verb. To this end, the company has written to publications that have used Xerox as a verb, and has also purchased print advertisements declaring that "you cannot "xerox" a document, but you can copy it on a Xerox Brand copying machine." Xerox Corporation continues to protect its trademark diligently in most if not all trademark categories. Despite their efforts, many dictionaries, including the Oxford English Dictionary, continue mentioning the usage of the word xerox as a verb.

See also

• xerography
• telautograph
• Corporate abuse
• Genericized trademark

External links

• Xerox home page (http://www.xerox.com/)
• Fuji Xerox home page (http://www.fujixerox.com)
• Fuji Xerox Document Supplies home page in Australia (http://www.xeroxsupplies.com.au)
• Wiktionary - Entry on Xerox
• Inquirer: "Xerox forbids use of word Xeroxing" (http://www.theinquirer.net/?article=18492)
• Free market advocates celebrate Xerox history, innovation (http://www.mises.org/econsense/ch54.asp)
• Modi Group (http://www.modigroup.com/associated.htm)
• Financial Express: "New reality bites BK Modi" (http://www.financialexpress.com/fe_full_story.php?content_id=88014)da:Xerox

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