Xerox Holdings Corp XRX

Xerox Continues to Face Long-Term Secular Headwinds

Xerox is the leader in print solutions, but we fear that this industry will remain in secular decline. As a company, Xerox specializes in enterprise print equipment, largely multifunction printers (printers that can print, copy, and scan) ranging from A3 to A4 paper sizes. We think the print industry is in a jam as the workplace becomes increasingly more digital. This trend was exacerbated by the COVID-19 pandemic, forcing many corporations to rethink their office and, by association, print needs. In our view, eroding switching costs for Xerox is reflected in its declining equipment market share as Canon and HP grew share. We think this secular decline as well as its competitive positioning is problematic for Xerox because nearly all of Xerox’s offerings are dependent on one another. Only about low double digits of print supplies revenue are unbundled from other Xerox contracts, like equipment leases.