Xerox faces day of reckoning

Office equipment company Xerox is coming under increasing pressure from investment groups to improve its woeful financial position, and analysts say it must choose its core business focus now or face extinction.

The news comes as New York finance group Moody's Investors Services warned that it may cut its 'Junk' debt rating for Xerox and its units. Moody's said that Xerox must be challenged to improve profitability and its balance sheets this year.

Xerox currently has debts of more than £5.4bn ($7.7bn) and the company's share price has fluctuated wildly over the last year.

Quocirca analyst Clive Longbottom said that Xerox had rested on its laurels for too long and had fallen to competition in key areas such as laser printers.

He believes that the company needs to choose between specialising in core markets or offering a broad range of higher quality equipment.

"Xerox has got really big problems, and a takeover by anybody doesn't appear likely," explained Longbottom. "Most customers will be tied into contracts with maintenance companies, which will cover them should anything happen to Xerox."