Page Three

By eweek  |  Posted 2002-10-28 Print this article Print

: Mulcahy Interview"> eWEEK: Was there a time at the end of the last cost reduction period when you said, "You know what, we got a billion three out of this …" Mulcahy: Isnt that enough?
eWEEK: Yes, or was there a point when you said, "We couldve done a lot more?"
Mulcahy: I think one of the things we discovered along the way is that, I think productivity is a never-ending goal for companies that are in competitive situations. So I dont think you can say youre done. I think you have to constantly look for what that next level of productivity that can be delivered. I think sometimes it gets addressed with systems enhancements, sometimes its optimization of certain parts of the company, sometimes its outsourcing. Weve done outsourcing of manufacturing, of back-office operations where we can get a better bang for our buck. So I think theres a lot of paths you could go, but you have to look at every single part of your value chain and just stay tough-minded on making sure they are best in class from a cost perspective. And if theyre not, that is where you have to focus your energies to make sure that you find the savings. I dont think you can say, "Im done," but I believe weve done a lot of the heavy lifting in the company and that were not in crisis mode as it relates to those kinds of actions. This is more now opportunistic. eWEEK: I think people equate crisis mode with work force reductions as well. Mulcahy: Absolutely. And this is not all about work force reductions. That doesnt mean that we wont, you know, certainly take work force reductions where theyre appropriate. But the fact is there are other ways to become more efficient and more productive. eWEEK: Would any work force reductions be on the same scale as they have been over the last two years? Mulcahy: I dont think were anticipating that, and I dont think were communicating that. Were really saying this is business as usual, were going to continue to look for opportunities where they are available and be aggressive and get ahead of this curve. And if the economy doesnt improve in the short term, I think wed like to be prepared to continue to deliver really good bottom-line results despite the fact of a weak economy. eWEEK: Bill and ½ with Fuji Xerox in 2001; by end of 2002 about the same. What about 2003 investment? Mulcahy: We have a commitment to maintain R&D spend at between 5 and 6 percent of revenues. Like every other part of our business, revenue is kind of a defining characteristic for what you spend. So were not looking to decline the ratios of R&D spend at all. And [we] certainly hope that well deliver on the revenue expectations. eWEEK: So theres no intention to decrease the amount of investment? Mulcahy: Not dramatically. I think whats pervasive though is that when you move off one big project you can come down in R&D spend based upon the fact that you completed a huge technical project and you may be ramping up someplace else, but it could create fluctuations in R&D spend that are not indicative of cost cutting; its just that youre supporting the appropriate programs with the right resources. eWEEK: With regard to "incorporation" of PARC, youve brought on Jim Gibbons as the groups new independent director. But do you have partners yet that have signed on? Mulcahy: One of the things that we wanted to do was to actually get someone like Jim on board to actually sponsor the negotiations. We do have a lot of interest, and its complicated in terms of percentage of equity, intellectual property ownership, a whole set of things. So were going to have Jim be the architect for driving a lot of those partnership discussions. eWEEK: So theres no one on board yet? Mulcahy: No. eWEEK: As far as Jims employment goes, Im not sure whats meant by independent director. Is he not being paid by Xerox? Mulcahy: Its a sponsored position. But Xerox will have a board that will act as independent directors. eWEEK: Services, launched a year ago. Is the revenue goal still to be about half of Xerox revenues by 2006? Mulcahy: Yes, thats an integrated technology and solutions, the technology plus the services. It includes hardware. eWEEK: So that revenue will include product sales? Mulcahy: It will, where our services include hardware that was intended to be included in that. I think that was kind of an unofficial projection, but its roughly right.


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