Icahn May Seek Xerox Board Seats

Xerox Corp. has struggled for years with shrinking sales of printers and copiers. Now the 109-year-old company has a new challenge: Activist investor Carl Icahn has taken a big stake and is trying to shake things up.

Mr. Icahn disclosed Monday that he has accumulated a 7.1% stake in Xerox, saying the company is undervalued and he may seek board seats. Xerox shares, which had fallen 22% so far this year as of Monday's close, rose 7.4% in after-hours trading to $11.69.

Mr. Icahn's disclosure comes a month after Xerox said it would launch a review of its business. After posting its first quarterly loss since 2010, the company's chief executive, Ursula Burns, said on Oct. 26 that "undertaking a comprehensive review of structural options for the company's portfolio is the right decision at this time."

Xerox spokesman Sean Collins said Monday that the company welcomed open and constructive dialogue with shareholders. "Our board and management team are committed to improving performance and creating value for shareholders and will continue to take the actions to advance these objectives," he said.

Despite several initiatives aimed at moving beyond its traditional office equipment roots, Xerox's revenue has been shrinking for years. The company, which had nearly $20 billion in revenue last year, ended Monday with a market value of about $10.6 billion.

Ms. Burns, a Xerox veteran who has run the company since 2009, has tried to transition into a services-based business that handles the back-office operations for companies and governments. Document management, bill processing and other services made up 56% of the company's top line during the nine months through Sept. 30.

Her boldest move was the $6.4 billion acquisition of Affiliated Computer Services, which had a big business providing work for state Medicare and Medicaid agencies. The deal added about 74,000 people to Xerox's then-workforce of about 54,000.

Mr. Icahn's stake would make the activist hedge-fund manager, who has also agitated for shake-ups from Clorox Co. to eBay Inc., the second-biggest holder of Xerox shares behind institutional holder Vanguard Group Inc., according to FactSet data.

Mr. Icahn said in a securities filing that he intends to hold talks with Xerox's management and board concerning "improving operational performance and pursuing strategic alternatives, as well as the possibility of board representation."

Drew FitzGerald and David Benoit contributed to this article.

Write to Josh Beckerman at [e-mail]

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November 23, 2015 21:15 ET (02:15 GMT)

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