Affiliated Computer Services Inc. (“ACS”), a subsidiary of Xerox Corp. (XRX), has signed a $200 million five-year contract with MGM Resorts International (MGM) to provide managed information technology services to the latter.
MGM Resorts International is a leading hospitality company having a portfolio of destination resort brands, including Bellagio, MGM Grand, Mandalay Bay and The Mirage. It has nearly 16 resorts and 165 restaurants under control, particularly in Nevada, Mississippi, Michigan, Illinois and Macau.
The contract will enable MGM Resorts to improve its quality of services and luxurious facilities. With ACS, the company can efficiently manage the IT purchasing needs as well as storage of vital data and continuously update its IT equipment.
On the other hand, ACS is an expansion mode and is determined to grow and strengthen its presence in the market. Two weeks ago, ACS also entered into a definitive agreement to buy Nashville, Tennessee-based CredenceHealth Inc. The attempt is surely going to enhance the quality of healthcare services, thereby generating sufficient demand in the face of growing consciousness over health issues.
With all these agreements, contracts and acquisitions Xerox aims to capitalize on the growing market, in turn strengthening its financial performance in the upcoming quarters.
Last year proved to be quite fruitful for Xerox with revenues of $21.6 billion, up by 42% from the year-ago level. The company’s net earnings were recorded at $1.30 billion or 94 cents per share compared with $613 million or 70 cents per share in the previous year. The company expects to see better performance in the near future based on its attempt to grow and expand its business, particularly the BPO.
Thus Xerox projects adjusted earnings in the range of $1.05 and $1.10 per share for full year 2011. However, intensifying competition and availability of substitutes for Xerox products have limited the company’s prospects to some extent.
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