May 11, 2000 4:50 PM PDT

Xerox chief executive resigns

Xerox said today that Rick Thoman has resigned from his role as president and chief executive of the company.

Current chairman Paul Allaire has taken over as CEO of the Stamford, Conn.-based company, a position he held until April 1999, Xerox said. Anne M. Mulcahy, who had previously been president of Xerox's general markets operations, has been promoted to president and chief operating officer.

Thoman's resignation was a mutual agreement between him and Xerox's board of directors, company spokesman Bill McKee said. "There was a mutual agreement that it was time for new leadership," he said.

The changes are effective immediately.

The management shakeup comes amid financial difficulties that have led to a precipitous drop in the company's stock price.

In March, Xerox announced that it would cut 5,200 jobs--5.5 percent of its work force--to boost profits. In January, Xerox reported that its fourth-quarter 1999 earnings fell by more than 50 percent, and its income would not rebound until the second half of this year.

J.P. Morgan senior equities analyst Daniel Kunstler said that Xerox's problems have mostly been about its execution, rather than the company's strategy. Although he called the move "radical" because its timing didn't seem to be connected to anything in particular, Kunstler said the management shakeup should help the company long term.

"Xerox's franchise has been scratched up a bit, but it hasn't been wrecked," he said.

Meanwhile, shares of the giant copier maker have dropped more than 59 percent since setting its 52-week high of $62.63 last May. Xerox closed today down $2 to $25.50.

McKee said the changes in management were not directly related to the company's stock price or recent financial results. He also declined to say whether Thoman received a severance package as part of his resignation.

 

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