On the day Anne Mulcahy was named president of Xerox back in 2000, the company’s stock dropped 9 percent. Mulcahy had worked at Xerox for more than two decades—she had even run a $6 billion division—but most of her experience was in sales and human relations. “When I joined the company, there was not a glimmer of thinking that I’d someday be running it,” she says, and in 2000 she was still a dark-horse candidate. She took the C.E.O. job a year later with virtually no finance experience, and Xerox’s name was so tarnished that she couldn’t find a C.F.O. Not long after she took the top job, the Securities and Exchange Commission hit Xerox with an accounting review that led to the restatement of $6.4 billion in revenue. The bulk of the problems occurred before she became C.E.O., but Mulcahy was lumped in with rogues like Worldcom’s Bernie Ebbers and Tyco’s Dennis Kozlowski.

Nobody makes that mistake now. Seven years later, Mulcahy, who will be 56 this month, has turned Xerox around. The company’s heavy debt load has been cleared up, and it’s solidly profitable. In 2006, its stock dividend was even restored. Xerox spends more than $900 million a year on research and ­development and has transitioned into the digital world, where it now leads the global market for color-imaging equipment. It also handles business services like helping companies convert their records into digital files; those services are more financially predictable than copier sales and so far have helped the company weather the current economic slowdown.

Still, some challenges remain. The stock price is stuck in the low teens, where it stood about five years ago, and Xerox faces fierce competition for all parts of its business from companies like Hewlett-Packard, Canon, and Ricoh. Mulcahy, who serves on the boards of other companies, including Target, Citigroup, and the Washington Post Co., talked about these issues with Condé Nast Portfolio contributor Michael Fitzgerald at Xerox’s corporate headquarters in Norwalk, Connecticut.

Xerox’s earnings have gone up throughout your tenure, but so far investors haven’t noticed. Your market cap is lower than your ­annual revenue. What can you do to make the stock go up?
We’re riding a wave right now that’s more about the market than it is about Xerox. You don’t get to manage the market; you only get to manage your company. And I think we’re focused on the right things. I spend a good amount of time talking with investors and analysts, but those conversations are never about trying to manage a stock price. We’re a long-term value investment.

Even though people refer to the turnaround at Xerox in the past tense, you’re still cutting people—1,000 employees in the second quarter, out of 57,000 worldwide. Do you feel like thejob is done?
The job is never done. I mean, the turnaround is way behind us. I expected to reach some point in time where I could put my feet up and coast a little bit. But I don’t think that’s the nature of global businesses today.