Xerox shares turned lower Tuesday, a day after activist investor Carl Icahn disclosed a new 7.1 percent stake in what he called an "undervalued" company.
Xerox stock had risen more than 7 percent in after-hours trading Monday. The stock has fallen 23 percent this year.
In trading Tuesday morning, it was down 2.7 percent.
Earlier Monday, Icahn said in a Securities and Exchange Commission filing he would discuss operational changes and strategic alternatives with Xerox management. He also mentioned possible board representation.
The stake makes Icahn the business and document services company's second-largest shareholder, according to FactSet data cited by Dow Jones.
"We are aware that Carl Icahn has made an investment in the company. Xerox welcomes open communications with shareholders and values constructive dialogue," Xerox said in a statement.
Ivan Feinseth, a Tigress Financial Partners LLC analyst, offered a cautious view about Icahn's move. "I like Icahn. He has done well but I just don't know what he can do here," Feinseth told Reuters.
Susquehanna Financial Group LLLP analyst James Friedman told Reuters that Icahn can press for many things, including selling Xerox's equity stake in its joint venture Fuji Xerox and separating the documents business and the IT services business.
Xerox's IT services business offers business process outsourcing while the document outsourcing business primarily includes sales of printers and copiers.
Friedman saud Icahn can position himself for a board seat in the upcoming May elections.
"Getting on the board is the easy part, actually fixing the business is harder," Friedman told Reuters.
The company posted a third-quarter net loss of $31 million. It reported GAAP revenue of $4.33 billion, a 10 percent decrease from the previous year.
Xerox is the latest struggling stock Icahn has bought this year. In August, he reported a stake in Freeport-McMoRan, which has plunged 65 percent this year.
— Reuters contributed to this report.