Xerox to ditch SoHo, plans 1300 job cuts

Office equipment maker Xerox is to discontinue its small office home office(SoHo) business and cut its 1500 strong workforce by about 1300 in an effort to turn its business around.

A third of the unit's employees are based in Ireland, with the remaining two thirds located in the New York area.

A company spokesperson said some US-based employees were notified on Thursday and European workers will be advised soon.

The company said the decision was taken despite efforts by Xerox to secure equity partners for the business.

Anne Mulcahy, president and chief operating officer at Xerox, said it would be likely that 200 to 300 employees would be retained to ensure that the company is able to provide supplies, support and services to existing SoHo customers.

Mulcahy said the decision sharpens the company's focus and supports its turnaround strategy, enabling it to "generate significant cash savings and improved earnings that are incremental to our previous expectations to return to profitability in the second half and for the full year".

According to Mulcahy, the market for the inkjet model has changed dramatically and the slowdown is expected to continue.

In the first quarter of 2001, the company recorded a pre-tax loss of $82m in its SoHo business. The business generated $139m in revenues in the first quarter, or about three per cent of total quarterly revenues.

Xerox will, over the next six months, discontinue its line of personal inkjet and xerographic products that are sold primarily through retail channels.

A charge related to the move will be announced with the company's second-quarter results.