Excerpt from Issue 10
Volume 1, Issue 10
November 4, 2002
The OPS Newsletter is published by StockDiagnostics.com. OPSTM is a term coined by StockDiagnostics.com that means Operational-cashflow Per Share.
OPS Bargain
The OPS Bargain of the week is Xerox Corporation (NYSE: XRX, $7.06). This leading global document management company, which has been in deep trouble for years, seems to be showing signs of considerable improvement. Over the past twelve months, the company has had a trailing twelve-month OPS of $2.39 and an EPS of $0.07. For the past fiscal quarter, OPS was $0.74 and EPS was $0.13. Moreover, Xerox has had five consecutive positive quarters of OPS. Share prices for Xerox since last April have been in a precipitous decline, falling to a low of $4.30 on October 9 -- which incidentally was also the low this year for the Dow -- from a 2002 high of $11.08 on April 1. The reason Xerox appears to be emerging from its near-death experience is that it has taken the bitter pills of shedding massive numbers of employees and asset sales. In the past two years, it has eliminated 10,000 jobs, with an additional 400 headquarters jobs expected to be cut this month. It has also sold several businesses and other assets. These restructuring activities by Xerox have brought $1.3 billion in cash and savings to the company. Meanwhile, Xerox continues to move ahead with innovations and new products. On October 21, Xerox announced the filing of its 15,000th patent. On October 7, Xerox announced the rollout of its groundbreaking DocuColor iGen3(TM) Digital Production Press and it unveiled a cadre of solutions and services designed to drive growth in its high-end printing business, leapfrogging competitive offerings. In our view the combination of Xerox' significantly improved financials and the aggressive rollout of high-end, high-margin new products will help the company's performance on Wall Street. Xerox shares in the recent trading sessions increased to $7.06 on November 1 from a low of $4.30 on October 9. We believe this reversal is due to the company's better outlook, even in a difficult economic environment, as well as the market's recent reversal of fortune.