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 user 2013-06-23 at 9:05:43 am Views: 118
  • #2165
    Ikon CEO: Printer Market Recovery Tied To Economic Growth

    The market for office printers will remain soft until later in the economic recovery, according to Ikon Office Solutions Inc. (IKN) Chief Executive Matthew Espe.

    "We're Going to recover later in that cycle," Espe told Dow Jones Newswires in an interview this week. "There's still a lot of excess capacity out there in our stuff."

    Espe said it would take several quarters of annualized gross-domestic-product growth in the range of 4% to 5% before Ikon and its rivals see meaningful growth in document-equipment sales. Annualized U.S. GDP growth slowed to 2.8% in the second quarter from 4.5% in the first quarter, according to the federal Bureau of Economic Analysis.

    Ikon, of Malvern, Pa., distributes printers, copiers and related equipment and services. It sells equipment made by Canon Inc. , Ricoh Co. and others, and competes with Xerox Corp..

    Excess capacity and falling product prices have put a damper on Ikon's revenue in recent periods. In the fiscal year ended Sept. 30, 2003, revenue fell 4% to $4.71 billion from $4.93 billion the year before. Analysts surveyed by Thomson First Call expect revenue for the year ending Sept. 30 to fall slightly to $4.67 billion.

    Ikon last month predicted it would earn 72 cents to 75 cents a share in fiscal 2004, excluding any losses on early extinguishment of debt, gains or losses on divestitures, and a tax benefit from a second-quarter tax gain on the sale of its U.S. leasing business. Last year, Ikon earned 75 cents a share, which included a loss from the early repayment of debt. Excluding that loss, fiscal 2003 earnings were 82 cents a share.

    Espe declined to comment on the company's fiscal 2004 forecast. Ikon is scheduled to report fiscal fourth-quarter results Oct. 28.

    Espe, Ikon's CEO since August 2002, said the document-management industry has stabilized in recent quarters and Ikon's customers "are becoming slowly optimistic."

    But sales have been partly hindered by excess capacity, caused by heavy spending on office equipment in the late 1990s, he said.

    Sustained GDP growth in the range of 4% to 5% "will give our customers confidence and also a recovery in employment," he said. "We need people in their offices pushing the green button."

    Still, even if the printer-equipment market remains soft, Ikon believes it can grow by pushing document services. In May, Ikon formed a new unit, Ikon Enterprise Services, which offers customer service, outsourcing and consulting and is led by Michael Kohlsdorf, a senior vice president. Ikon has augmented its services offerings by signing distribution pacts with document-software providers such as EMC Corp.'s (EMC) Documentum unit.

    In the first three quarters of fiscal 2004, Ikon's professional services revenue rose nearly 40% from a year earlier, Espe said.

    Ikon's shares recently traded at $11.64, down 7 cents.

    * Post was edited: 2004-09-28 10:43:00