Xerox Corp. stockholders like to open their annual meetings with a round of applause for management—and they have ample reason. Since 1960, when Chairman Joseph Chamberlain Wilson introduced one of history's most profitable single products—the Xerox 914 office copier—the company's sales have increased 18-fold (to last year's $701 million), its profits have grown 37 times (to $97 million), and its stock, long the shiniest of the glamour issues, has increased in value 50 times to the latest close of $277.67.
Last week's meeting in Rochester, N.Y., opened with the usual applause but ended in astonishment. Joe Wilson, 58, caught 2,200 attentive stockholders unaware at the meeting's close with word that he was stepping out of day-today management, would devote himself to "long-range planning." And "with a sense that this is a great milestone for Xerox," he announced that his title of chief executive officer would pass to C. (for Charles) Peter McColough, 45, the company's president since 1966.
Protective Patents. Few histories of business growth are as dramatic as that of Xerox. Founded in 1906 as the Haloid Co., a maker of photographic papers, the firm prospered quietly until the early '40s, when noisy court battles erupted among its twelve founding partners—including Wilson's father, who eventually won control. When his turn to take over the family fiefdom came in 1946, Joe Wilson, then 36, found it faltering. Searching for profitable new business, he seized on a little-known copying process called "xerography," and in eight years raised some $87.6 million in loans and stock issues to finance research. Once the process—which is unique in that it permits use of ordinary paper—was perfected, Wilson made a second daring decision. Rather than sell his machines outright, he determined to lease them for a flat rental, charge a small fee per copy. Thus the early Xerox 914s, which cost some $2,000 to make, could earn more than $4,000 in one year alone.
Wilson's brilliant associate, onetime Rochester Lawyer Sol M. Linowitz, who two years ago left the Xerox executive committee chairmanship to become U.S. Ambassador to the Organization of the American States, made sure that the techniques could not be copied for some time. A thicket of more than 500 patents surrounds the basic xerography process. Meanwhile, the company is making machines that turn out copies—and therefore revenues —at ever faster rates. The 914 model turns out 420 pages per hour. Model 2400, launched 21 years ago, makes 2,400 pages of copy per hour. After a faltering start because prices were too high, new machines have been in great demand, and last year they produced more than half of the billions of Xerox copies made. This year Xerox is invading the high-volume duplicating market with its 3600 model, which can turn out 3,600 copies per hour.