UPDATE: Xerox CEO, President Thoman Resigns

SAN FRANCISCO (05/11/2000) - In a surprise move, Rick Thoman, chief executive officer and president of troubled office equipment and software vendor Xerox Corp. today announced his resignation from the company. Thoman will be replaced as interim CEO by current Xerox Chairman Paul Allaire, who was Thoman's predecessor in the CEO role.

In addition, Anne Mulcahy was promoted to Xerox president and chief operating officer, according to a company statement issued today. Mulcahy has also been nominated for election to Xerox's board, taking Thoman's place there. She is currently president of the vendor's general markets division.

Xerox's board of directors has determined that Allaire will continue as company chairman for the next two years. The vendor is also creating a four-member team to oversee overall Xerox strategy. To be known as the Office of the Chairman, the team will be headed up by Allaire along with Mulcahy and company Vice Chairmen William Buehler and Barry Romeril.

In a letter to Xerox employees today, Thoman said he thought the company was beginning to rebound from the financial troubles that have plagued it in recent years. Thoman announced in December of last year that the company would cut 5,200 jobs, or 5.5 percent of its total workforce.

"While we should feel good about our progress to date, we still have much work to do to execute these strategies this year and in 2001," Thoman wrote.

He also expressed sadness at cutting so many jobs at Xerox. "My major regret was that the timing of these transformations has taken longer and has had a greater financial and human impact than I would have liked," he wrote.

In a statement issued by Xerox today, Allaire said he would continue to implement the company's current restructuring strategies. He also cited the "experience" of the new team, in contrast to Thoman's one-year tenure as CEO.

"We are grateful for Rick's contributions in leading the company through a period of major repositioning," Allaire said in today's statement. "However, both Rick and the board felt it best for the company to move forward with an experienced Xerox team that will lead Xerox people and efficiently execute the strategy."

Mulcahy, a 24-year Xerox veteran, has been mentioned prominently in connection with the permanent CEO position, according to Angele Boyd, an analyst with market research company International Data Corp. (IDC). "I'm hearing Mulcahy is the heir apparent," Boyd said in a phone interview today.

Allaire praised Mulcahy in today's statement. "Anne brings to the Office of the Chairman a proven track record of success in executive positions within the marketing and direct sales organizations, as chief staff officer and, most recently, as president of our General Markets Operations," he wrote.

Xerox has been facing intense competition from Hewlett-Packard Co. and others in the printer and copier space, said Paula Bursley, an analyst with Dataquest Inc, in a phone interview today. "It's been a time when Xerox has been trying to gain ground, while prices and margins are declining," Bursley said in a phone interview today.

Xerox, in Stamford, Connecticut, is at +1-203-968-3000, or at http://www.xerox.com/.

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