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Conduent CEO: ‘2020 Is Going To Be Better. It Has To Be’

“I don't think there's any surprises. I read all the press; I knew what I was getting into,” Conduent CEO Cliff Skelton said.

Conduent CEO Cliff Skelton says the Xerox spin-off is set to turn a corner in 2020.

“Q4 is not going to be better in terms of new business signings… 2020 is going to be better,” Skelton told investors after the company posted a $16 million net loss on a 15 percent decline in sales for its third quarter ended Sept. 30. “It has to be. You will start seeing a turn in 2020.”

Sales of $1.1 billion for the quarter were slightly better than internal expectations, said Skelton. Taking into account divestitures sales were down just four percent.

“The year-over-year decline is caused by previously discussed client losses, price downs, and missed sales opportunities,” said Skelton.

Wall Street responded positively to the earnings news pushing Conduent shares to $7.56 up 14-percent in Thursday morning trading.

In response to an analyst question about an upside, Skelton said the company has great relationships with its customers which it plans to use to springboard growth in the coming year. He said it will take work to get there.

“I don't think there's any surprises,” he said. “I read all the press; I knew what I was getting into. No surprises on the negative side, all positive surprises.”

Three years into its run, Conduent has yet to find its footing. After successfully shedding a billion in assets as part of a planned divestiture, the company is still reeling from legacy issues it inherited as the business processing outsourcing unit of Xerox.

Those included complaints from lawmakers nationwide over billing issues connected to its automated toll collection devices, as well as a massive $2 billion Medcaid fraud lawsuit in Texas. The company settled the suit for $236 million earlier this year and is expected to pay the final $118 million payment to Texas in January 2020.

After the departure of its CEO and board chairman amid a public spat with activist investor Carl Icahn, the company in August turned to COO and interim CEO Cliff Skelton to take the helm. Last quarter, he told investors that he would undertake a strategic review of the company to see what, if any assets could be sold, up to and including Conduent itself.

Skelton said that review is nearing completion and the company expect to begin “taking action on any potential divestitures” in the first half of 2020.

“The focus of this review is to create shareholder value by looking at potentially divesting assets that we believe have a scarcity value in the market and potentially may command a premium, while seeking to simplify the remaining company to take advantage of strong market opportunities and growth prospects," he said.

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