Anne Mulcahy, Chairman and CEO of Xerox

This is a partial transcript from Your World with Neil Cavuto, November 25, 2002, that was edited for clarity. Click here for complete access to all of Neil Cavuto's CEO interviews.

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NEIL CAVUTO, HOST: Xerox is sticking with its earnings estimates for the rest of the year, in fact, revising them upward. The office equipment company is also confident it will turn a profit by next year. It looks like Wall Street is buying it for now. The stock has more than doubled in a little more than a month. So, is it the real deal? Earlier, I spoke with Xerox CEO Anne Mulcahy in this exclusive interview.


ANNE MULCAHY, XEROX CHMN. & CEO (XRX): It certainly helps having a good story, but we've made a lot of commitments, we've delivered on all of them and I think people understand we are focused on value and growth in the future. And.

CAVUTO: But you inherited a pretty lousy story. In fact, when last we chatted, the question is how do you separate yourself from the baggage of the past? But you seem to be succeeding.

MULCAHY: Well, I think we have been executing and that is always the key to really successfully implementing a turn around. We've executed against the objectives. We have got a great team in place. And most importantly, I think we've got a company that's aligned around a common set of objectives and really is delivering.

CAVUTO: People have to buy your stuff, right? That is the bottom line. And in this economic environment the argument has that you might have great stuff, digital copiers and the whole nine yards, but people are not buying, are you noticing that's changing?

MULCAHY: Well, I think we are not noticing a lot of economic change but we are introducing a lot of new technology, which is always helpful even during difficult times. So we have a lot of new color technology, technologies that enable digital printing, lots of, you know, applications like variable printing for one-to-one client communications that are all reaching an audience that has a need for what we are offering.

CAVUTO: It is interesting, though, because Carly Fiorina, over at Hewlett-Packard, also reported better than expected in numbers or promised more of the same. You're indicating as much in your statements today. Can you both be on the same page? because don't you guys mutually like try to kill each other?

MULCAHY: We are certainly competitors in the office printing business. We have a much broader portfolio. We go from the very low-end to the very, very high end of production printing and publishing. But in the office printing area we are overlapping. But we feel very bullish about our offerings there. Our color printing capabilities are outstanding, priced right and doing very well in the marketplace.

CAVUTO: It is interesting, you have been leading this call, we've got to pare cost, we want to lower cost, I think $1 billion, you're en route, you want to continue that for next year.


CAVUTO: That is a tough road, though, is it not? And also it can kind of bum people out in the company, can't it?

MULCAHY: Yes. I think that is where our whole intent has been to get the company positioned for sustainable profitability. So a really dramatic change in the business model of the company, it has been hard work. And we are fortunate, we have got a company that has employees that actually really care about the company, who have bought into the story, who have been quite loyal and supportive and therefore very motivated about the positive progress that the company is making. But, a lot of that heavy lifting is done, which is also a good part of the message.

CAVUTO: Does that include a lot of the heavy legal investigations?


CAVUTO: A lot that you have inherited, but is that gone now?

MULCAHY: We've really put the vast majority of the issues behind us and the great news about 2003 that we delivered today is that we are focused on growth, and value building, and that we really have no distractions as we think about 2003.

CAVUTO: Iraq is always a wildcard. And a lot of CEOs with whom I chat say there is just no way to plan for that, that if it looks like we come to blows, all sorts of spending from the discretionary to corporate and the like freezes.


CAVUTO: Are you in that camp?

MULCAHY: Well, I think we are planning very conservatively. We are planning with the view towards if the economic news is good, then we have a great opportunity to over achieve going forward. If the economic news is not good, or deteriorates, we have taken a lot of the actions that we need to keep our heads above water and deliver sustained profitability, even during more difficult times. And I think that is the prudent way to plan these days.

CAVUTO: Do you ever look at just the economy the way it is right now, and say what we have been through is the worst of it, that from here on out things are getting better?

MULCAHY: I do, I think that the challenge for all of us is that I don't think any of us are expecting a dramatic turn of events, and that the improvements will be somewhat subtle and slow. And that in many ways, we have had to deal with issues about sizing our businesses for a more moderate economic approach, which I think will serve us well in the future. But I think unless we have some really difficult turn of events, that we have seen the worst behind us.


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