KODAK , XEROX ,CANON & EPSON ALL POST WEAK QUARTERLY SALES

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http://www.action-intell.com/2011/01/26/kodak%E2%80%99s-fiscal-2010-results-disappoint-but-consumer-inkjet-grows/

KODAK , XEROX ,CANON & EPSON ALL POST WEAK QUARTERLY SALES

Kodak’s Fiscal 2010 Results Disappoint, but Consumer Inkjet Grows
Today,
Kodak reported its financial results for fiscal 2010. While there were
bright spots for the firm, to be sure, Kodak’s overall performance was
disappointing, and the company’s share price has fallen to about $3.75
per share as of mid-day, down 17 percent from today’s opening price of
$4.24 per share. News that put the market in sell mode included a steep
25 percent decline in fourth-quarter revenue and a stunning 95 percent
decline in fourth-quarter profit. Even the firm’s digital businesses
revenue sank to $1.488 billion in the fourth quarter, down 25 percent
from the year-ago period. For the full fiscal year, sales were $7.187
billion, down 6 percent from fiscal 2009. What compounds these gloomy
results is that 2009 was hardly a banner year for the imaging industry,
so, in some respects, Kodak’s performance seems worse than at the height
of the recession.

The firm says its decline in digital revenue
in the fourth quarter “largely reflects the timing of intellectual
property licensing revenues.” Compounding the intellectual property (IP)
licensing problems for Kodak is that the firm just received some
potentially bad news for this area of its business. On January 24, the
U.S. International Trade Commission found that that Kodak’s patent claim
is invalid and not infringed in a complaint that the firm brought
against Apple and Research in Motion (RIM) over an image-preview feature
used in phones. In a press release, Kodak expressed confidence that the
ITC will ultimately rule that the patent claim at issue is valid and
infringed by Apple and RIM. Still, the news of the ITC’s initial
determination comes at an inopportune time for Kodak.

Kodak does
point to some improvements in its results, including a full-year 2010
loss from continuing operations of $58 million, or 22 cents per share—a
$174 million improvement as compared with a loss of $232 million, or 87
cents per share in the year-ago period. Kodak held $1.6 billion in cash
and cash equivalents as of December 31, 2010, up from $1.4 billion on
September 30, 2010. The firm’s full-year revenue from its digital
businesses grew by 1 percent, and Kodak’s digital businesses delivered
$301 million in earnings from operations for the year, a $308 million
improvement from 2009. Full-year 2010 consumer inkjet printer and ink
revenue grew by 35 percent.

Kodak’s move into the consumer inkjet
business has proven to be a smart one. The business is delivering
revenue growth. What is less clear is if and when the group will deliver
much needed profits to the company as a whole. Kodak’s latest results
announcements says its consumer inkjet business, “doubled gross profit
dollars from ink during 2010.” While it is excellent news that the firm
has grown its profit from ink, the firm needs to see much larger
increases in this and other areas of its business in order to offset the
declines in its traditional businesses and in its Graphic
Communications group

http://www.action-intell.com/2011/01/26/xerox%E2%80%99s-profit-declines-in-fourth-quarter/
Xerox’s Profit Declines in Fourth Quarter
On
January 26, Xerox released its financial results for the fourth quarter
of 2010. Much of the news from the printer and copier maker, which has
expanded into the services business through its acquisition of
Affiliated Computer Services (ACS), was good. Still, a fourth-quarter
profit decline, a first-quarter profit estimate that was at the low end
of Wall Street estimates, and the news that CFO Lawrence Zimmerman would
retire sent the firm’s share price down more than 7 percent or 87 cents
to close at $10.53. Mr. Zimmerman will be replaced by Luca Maestri,
currently CFO of Nokia Siemens Networks.

There was much positive
news from the firm. For the full year, Xerox brought in $21.633 billion
in revenue, up 43 percent from 15.179 billion in 2009. Xerox saw a 42
percent increase in revenue to $5.98 billion in the fourth quarter, up
from $4.22 billion in the year-ago period, before the ACS acquisition.
According to a presentation accompanying the results announcement, the
firm derived 45 percent of its revenue in the fourth quarter from its
services business. Revenue from technology, representing the sale of
document systems, supplies, technical service, and financing of
products, was flat or up 1 percent in constant currency. Total
installations of Xerox equipment increased 6 percent. The firm saw
particularly strong growth in installations of color and low-end
monochrome devices. Installations of A4 monochrome MFPs were up 25
percent for the quarter and 46 percent for the fiscal year.
Installations of A4 color MFPs were up 27 percent in the fourth quarter
and 39 percent for the tear. Installations of mid-range A4 color MFPs
increased 22 percent for the quarter and 27 percent for the year, and
high-end color device saw an increase in installations of 19 percent in
Q4 and 26 percent for the year.

On the down side, Xerox’s
fourth-quarter net income fell to $171 million, or 12 cents a share,
down from $180 million, or 20 cents a share, one year ago. Excluding
costs for restructuring charges and acquisitions, the company’s adjusted
EPS for the quarter was 29 cents a share. Also disappointing for those
who follow the supplies industry was supplies revenue was flat
year-over-year at constant currency.Xerox forecast first-quarter 2011
earnings of 20 to 22 cents per share, on the low side of analyst
expectations. For the full fiscal 2011, Xerox projects earnings of $1.05
to $1.10 a share, while analysts had estimated approximately $1.10 per
share for the full year.

Despite the market’s reaction to Xerox’s
earning release, the company’s results show how many of Xerox’s
strategies, including the shift to color hardware and entering the
services business, have transformed the company for the better. However,
as more companies look to follow this model and transform themselves
from hardware vendors into services providers (see News Briefing, “Ricoh
Will Invest $300 Million to Grow Services Business”), we suspect that
more companies will see a flattening in supplies revenue, much like
Xerox has. Indeed, according to a recent InfoTrends report (see News
Briefing, “InfoTrends Study Reports Managed Print Services Reduces the
Market for Supplies”),  MPS in the office environment will reduce the
consumption of marking and paper supplies in the United States by $2.6
billion in 2014.

http://www.action-intell.com/2011/01/27/canon-reports-q4-profit-declines-but-strong-full-year-results-and-outlook/
Canon Reports Q4 Profit Declines but Strong Full-Year Results and Outlook
On
January 27, Canon reported financial results for the fourth-quarter and
fiscal 2010, ended December 31. The firm complained that the strong
appreciation of the yen dragged down profits. (Approximately 80 percent
of Canon’s revenue comes from outside of Japan.) Canon indicated that
the average value of the yen during the year was ¥87.40 against the U.S.
dollar, a year-on-year appreciation of approximately ¥6, and ¥114.97
against the euro, a year-on-year appreciation of approximately ¥15.
Indeed in the fourth quarter, Canon reported a net profit of ¥54 billion
($666 million), down 12.4 percent from the fourth quarter of 2009.

Despite
that blemish on its results, the firm’s other news was good.
Fourth-quarter sales grew to ¥1.07 trillion ($13.2 billion), up 11.9
percent year-over-year. For the full fiscal year, Canon reported sales
of ¥3.7 trillion ($45.8 billion), up 15.5 percent from fiscal 2009, and
net profit of ¥246.6 billion ($3.0 billion), up 87.3 percent from
2009.For fiscal 2011, Canon expects full-year consolidated net sales to
grow 10.6 percent to  ¥4.1 trillion ($50.6 billion) and net income to
grow 25.7 percent to ¥310.0 billion ($3.8 billion).

In its office
equipment business, Canon saw a recovery in demand for MFPs, with sales
volume for both color and monochrome models increasing in the fourth
quarter. The company also saw a substantial increase in sales volume in
its laser printer business, which had sluggish sales in 2009. In the
firm’s consumer business, Canon said that demand for inkjet printers
continued on a track to recovery. Sales of inkjet devices were
particularly strong in Asia.

In morning trading on the New York
Stock Exchange, Canon’s share price was up slightly, a little over 1
percent.*U.S. dollar amounts are translated from yen at the rate of JPY
81= U.S.$1, the approximate exchange rate on the Tokyo Foreign Exchange
Market as of December 30, 2010.

http://www.action-intell.com/2011/01/28/epson-reports-disappointing-q3-on-weak-inkjet-sales/
Epson Reports Disappointing Q3 on Weak Inkjet Sales
On
January 28, Seiko Epson reported its financial results for the third
quarter of fiscal 2010* and its consolidated results for the first nine
months of the year. While there were some positives in the firm’s
report, particularly in its performance for the first nine months of the
year, Epson’s third-quarter performance was disappointing, and the
firm’s mainstay inkjet business was weak.

First, the good news.
Cumulative net sales for the first three quarters (nine months) of the
year were ¥747.3 billion ($9.17 billion*), up 1.2 percent over the same
period last year. The firm attributed the increase to increased unit
shipments of LCD projectors, crystal devices, semiconductor products, IC
handlers, and business inkjet printers. Net income for the first nine
months of the year was ¥17.0 billion ($208.7 million), up from a net
loss of ¥4.7 billion in the year-ago period.

Now, the bad news.
By almost every metric, Epson’s third-quarter results were not good. For
the third-quarter, Epson reported net sales of ¥268.0 billion ($3.29
billion), down 7.1 percent compared with the third quarter of 2009. In
the quarter, the firm’s operating income fell 38.9 percent to ¥19.2
billion ($236.0 million), and net income declined a stunning 61.0
percent to ¥9.5 billion ($117.1 million.) One factor contributing to the
net income decline is that Epson reported extraordinary losses for the
quarter (see notice), including business structure improvement expenses
of ¥5.343 billion ($65.6 million) related to the termination of its
small- and medium-sized display business.

Like Canon, Epson was
impacted by the yen’s appreciation. The firm said during the quarter
under review the average exchange rates for the yen against the U.S.
dollar was ¥82.64, an 8 percent appreciation from one year ago, and the
exchange rate for the yen against the euro was ¥112.23, which marks a 15
percent appreciation compared with the same period last year.

But,
more alarmingly, Epson also reported weakness in its core inkjet
business. Third-quarter net sales in the information-related equipment
segment were ¥199.7 billion ($2.45 billion), down 6.3 percent
year-over-year. This area of the firm’s business includes the firm’s
printer and supplies businesses, scanners, LCD projectors, LCD monitors,
label writers, and PCs.

Epson said that demand for consumer
inkjet printers and consumables was weak, with unit shipments flat
year-over-year. The firm said consumer inkjet sales were flat in Europe
and contracted in North America, and shipments in this segment were
“hurt by fierce competition in Asia.” In more positive news, Epson saw
increased business inkjet printer demand in China and other parts of
Asia, and unit shipments of large-format printers grew, but unit
shipments of consumables for these devices declined and average selling
prices rose.

http://www.action-intell.com/2011/01/26/kodak%E2%80%99s-fiscal-2010-results-disappoint-but-consumer-inkjet-grows/

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February 3, 2011 at 9:05 AM