I agree there was indeed nothing inspiring in the announcement. However, the announcement was still consistent with the two key points of the investment thesis.
Continued transition to a services company. Total Q1 Revenue was $5.5b of which $3.6b was “services outsourcing, and rentals”. I'm not sure exactly what is included in the $3.6b, but taken at face value, Xerox is now 2/3 a services company. FYI, they also classify $4.6b of the $5.5 b revenue as annuity business. Maybe they should have taken the ACS name when they acquired them...hmm. This reminds me of the transition IBM made from hardware to services. It took some time for the market to acknowledge that for IBM, but it seems to have worked out well for IBM. Hopefully at some point it will work out for Xerox.
Confirmed full year guidance. So earnings of $1.10/share this year continues to seem plausible. Hopefully, at some point, the market will put a 12+ multiple on these earnings and the stock can get to $13 for a nice gain.
Given the above, I continue to work towards accumulating a full position in XRX. Specifically, as Xerox dropped this week, the $11 May puts for $.55 were sold. In common sense language, that means the third lot of stock will likely be added to the portfolio at $10.46 at expiration on May 20th.
Overall, the portfolio is in essence long three lots at an average price of $10.68. (Friday's close $10.09 ..ouch) A little more patience and better trade execution could certainly have gotten the position cheaper...but that is “yesterdays news”.
Will be looking to add a 4th and final lot. After that, wait for awhile for either
the market to recognize my “obviously correct” thesis....lol
a chance to harvest capital gain tax losses ...lol
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