Xerox' CEO Rejects Lexmark Takeover Talk

Mulcahy, in a conference call with analysts to discuss Xerox' third-quarter earnings, fielded a question about whether she would be interested in Lexmark - - which has been the subject of increasing takeover chatter in recent weeks.

"There is nothing that Lexmark would bring to the table that would really be value-creating for us," Mulcahy said. Xerox is in the process of digesting an earlier, $1.5 billion takeover of distributor Global Imaging Systems - - a deal that Mulcahy has described as growth-inducing and as dovetailing with her company's growth strategy. She said Xerox would continue to look for acquisitions in service vertical markets and smaller software properties.

She also said Xerox would continue seeking growth through its work with solution providers in the channel, an effort Xerox stepped up earlier this year.

"I don't think Lexmark is an ideal candidate for that kind of view," Mulcahy said.

For its third quarter, Xerox reported revenue of $4.3 billion and earnings of 27 cents per share - - a number that beat the average of Wall Street analysts expectations, as measured by Thomson Financial, by a penny per share. In particular, Xerox said its color printers and color MFPs were key drivers of growth, with strong performance in the third quarter.

Lexmark, Lexington, Kentucky, is in the midst of a difficult year in which it has seen sales and earnings under pressure, an underperforming consumer business and pressure in the part of its business that makes and sells printers to OEM customers, like Dell. Lexmark reports its earnings next week.

Last week, reports surfaced that speculators were hinting Dell, Round Rock, Texas, might make a play to takeover Lexmark, but that talk has largely dissipated. Last year, Lenovo was mentioned as a possible suitor for Lexmark, but Lenovo CEO William Amelio, in an interview with CMP Channel earlier this year, suggested that wasn't a likely possibility.

Meanwhile, Xerox continues to show momentum in the channel.

"We are still doing great with Xerox," said Vinny DiSpigno, CEO of Webistix, a Holbrook, N.Y.-based solution provider and Xerox reseller. Webistix is also an Apple specialist, and DiSpigno says the combination of the Apple platform, which has traditionally appealed to those in the graphics business, and Xerox' color document technology, has worked well.

"As an Apple Specialist many of our clients are in the print, publishing and media industries where color is extremely important," DiSpigno said. "The (Xerox) solid ink technology is outstanding and the high end 7760 is a real workhorse. Since we now have a large install base our consumables business just keeps growing so it provides us with a nice recurring revenue stream."