Xerox faces class action lawsuit
November 21, 2024
After an investigation on behalf of investors was announced, Xerox is now facing a class action lawsuit on behalf of investors.
Bragar Eagel & Squire, P.C. and other law firms announced that a class action lawsuit has been filed against Xerox Holdings Corporation (Xerox or the Company) in the United States District Court for the Southern District of New York on behalf of all persons and entities who purchased or otherwise acquired Xerox securities between 25 January 2024 and 28 October 2024, both dates inclusive (the Class Period).
Investors have until 20 January 2025 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
On 23 April 2024, before the market opened, the Company revealed that for second quarter 2024, quarterly revenue was down 12.4% year-over-year to $1.50 billion (€1.43 billion), net loss fell to -$113 million (€107.44 million) (down $184 million (€174.92 million) year-over-year), and equipment sales declined 25.8% year-over-year to $290 million (€275.69 million). The Company admitted, in part, “geographic simplification” had driven the year-over-year decline. The Company also partially disclosed that its “Reinvention” plan had been “initially disruptive to sales operations” but assured investors it was “seeing the benefits of the new business unit-led operating model in equipment order momentum.”
On this news, the Company’s share price fell $1.66 (€1.58), or 10.11%, to close at $14.76 (€14.03) per share on 23 April 2024, on unusually heavy trading volume.
Then, on 29 October 2024, before the market opened, the Company revealed “lower-than-expected improvements in sales force productivity” and “delays in the global launch of two new products” had led to “sales underperformance.” The Company disclosed that for third quarter 2024, quarterly revenue was down 7.5% year-over-year to $1.53 billion (€1.45 billion), net loss fell to -$1.2 billion (€1.14 billion) (down $1.3 billion (€1.24 billion) year-over-year), and equipment sales declined 12.2% year over year to $339 million (€322.32 million).
In a corresponding earnings call, the Company’s Chief Operating Officer John Bruno revealed the product delay was in fact a “forecasting issue” where the Company “had higher expectations that we were going to flush through the older product” which it needed to “sell through” in order to “make those transitions.”
On this news, the Company’s share price fell $1.79 (€1.70), or 17.41%, to close at $8.49 (€8.07) per share on 29 October 2024, on unusually heavy trading volume.
The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that, after a large workforce reduction, the Company’s salesforce was reorganized with new territory assignments and account coverage; (2) that, as a result, the Company’s salesforce productivity was disrupted; (3) that, as a result, the Company had a lower rate of sell-through of older products; (4) that the difficulties in flushing out older product would delay the launch of key products; (5) that, as a result, Xerox was likely to experience lower sales and revenue; and (6) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
Categories : Around the Industry
Tags : Class Action Investors Lawsuit Legal Xerox
