Topic: Growth Stocks

The Wall Street Stock Forecaster Hotline – Friday, October 2, 2009

Article Excerpt

XEROX CORP., $7.32, New York symbol XRX, fell 7% this week after it agreed to buy Dallas-based Affiliated Computer Services Inc. (New York symbol ACS). That’s because investors fear the company is paying too much for this business. ACS sells computer-outsourcing services to large corporations and government agencies. The company helps these clients focus on their main businesses by automating routine functions, such as accounting and buying supplies. Xerox is paying $5.3 billion in cash and shares for ACS, based on Xerox’s current share price. That’s equal to 83% of Xerox’s market cap. Buying ACS should cut Xerox’s reliance on selling copiers, laser printers and other high-end publishing equipment. The recession has hurt demand for these products. The combined company will have $22 billion of annual revenue, $17 billion of which will come from selling services under ongoing contracts. As well, Xerox feels that it can save $300 million to $400 million a year over the first three years by combining the…