CANON’s QUARTERLY PROFIT SURGES 29%

[Anonymous]

Canon’s quarterly profit surges 29%
AUGUST
O6Booming digital camera and printer sales lifted Canon Inc.’s earnings
by 29 percent in the most recent quarter, beating its own expectations
and keeping the company firmly on track for a seventh year of record
earnings.
A stronger dollar also helped lift Canon’s net
profit for the quarter to 105.9 billion yen ($906 million) from 82.2
billion yen a year ago, the Tokyo-based company said Thursday. The
results set a record for the April-June period and beat the company’s
initial projections by over 13 billion yen ($111.2 million), it said.
Canon, Japan’s top precision equipment maker known for its IXY and EOS
digital cameras, also raised its net profit outlook for 2006 to 440
billion yen from 432 billion yen for a seventh consecutive year of
record earnings, citing robust demand, especially from overseas.

Group
sales jumped 13 percent to 1.03 trillion yen ($8.8 billion). Digital
camera and camcorder sales were especially strong, surging 21 percent
to 460.3 billion yen ($3.9 billion). Sales of copy machines, computer
peripherals and other office equipment rose 8.6 percent rise to 655.4
billion yen ($5.6 billion). The successful rollout of new products like
the high-end digital single-reflex camera EOS 30D and new network
copiers helped offset the effect of falling prices in an intensely
competitive digital goods market, Canon said. “Canon has posted a
fantastic result in their camera business,” said Damian Thong, a senior
technology analyst at Macquarie Securities Japan, adding the company
could expect robust sales through the rest of the year. “Consumer
tastes are shifting toward higher-end models, which is good for Canon
because it has better-designed and more advanced cameras… we may even
see Canon taking market share away from smaller camera makers,” Thong
said. Tokyo-based Canon plans to soon extend its product line by
entering the TV market next year with a new kind of flat-panel
technology it’s developing with Japanese electronics maker Toshiba
Corp. Today, flat TVs usually employ either liquid crystal displays or
plasma displays. But Canon’s TVs will use SEDs, or surface-conduction
electron-emitter displays, with a beam-emitting technology similar to
old-style cathode-ray TVs that the company has argued offers better
picture quality. Some analysts, however, have said Canon may struggle
to bring down costs fast enough to seriously challenge other
flat-screen technologies. “Canon is taking a risk,” Thong said. “But
this is clearly something Canon wants to do to secure future growth.”
Thursday’s earnings results were the first since Tsuneji Uchida, 64, a
key figure in the upcoming SED television project, took over as the
company’s new president and chief operating officer in May. Uchida
succeeded Fujio Mitarai, who is credited with transforming Canon from a
debt-ridden mess ten years ago to a globally competitive company
through severe cost cuts and by focusing on profitable products like
copiers, printers and cameras. Canon’s consistent profitability has
been especially lauded because other Japanese electronics makers,
including Sony Corp. and Matsush*ta Electric Industrial Co., saw their
profits tumble about five years ago as prices plunged for digital
gadgets and cheaper Asian rivals challenged Japanese makers’ domination
on the global market. Mitarai resigned as Canon president in May to
take over the leadership of Japan’s foremost business lobby, the Nippon
Keidanren, though he still remains Canon’s chairman and CEO. Canon is
also set to face tough competition in its mainstay printer business as
Dell Inc. has entered the Japanese market for color laser printers,
aiming to undercut competition with prices half those of its Japanese
rivals. Dell has been selling ink jet and black-and-white laser
printers in Japan since 2004, and is now entering the more lucrative
color laser market. The greatest concern for the company is a potential
slowdown in the U.S. economy which may hurt sales there, Canon senior
executive for finance and accounting Toshizo Tanaka said on the
sidelines of a press conference Thursday. Canon shares, which surged
last year but have since taken a beating amid a general slump in
Japanese markets, fell slightly to 5,390 yen ($46.11)

[Author]

August 2, 2006 at 11:22 AM