*NEWS*CANON’s QUARTERLY PROFIT SURGES 29%

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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)

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August 2, 2006 at 11:20 AM