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Price War Hurts Epson Inkjet Revenues
Epson Profit Down 73%
Seiko Epson has suffered a huge drop in net profit with second quarter profit falling an astonishing 73 per cent.
Reporting
First Half results the company fell victim to significant declines in
average selling prices for both inkjet printers and display.
Reporting
a Net Loss of ¥1.16 billion for the first half to September 30 the
company claimed it was forced to drop inkjet printer prices in the US
by more than 10 per cent as it faced price competition from Hewlett
Packard. HP and Epson are the number one and two printer vendors world
wide (respectively). However, the market is moving rapidly to Colour
Laser technologies which have a higher profit margin.
The second
quarter results were the worst for Epson with net income falling to
just ¥5.8B down from ¥21.9B in the year ago quarter. This occurred
despite sales rising by 8.4 percent to ¥380B.
Seiko Epson is not
just suffering in the inkjet space, price declines in the LCD market
(Seiko sells LCDs used in mobile phones) have also suffered. The
relevant division reported an operating loss of ¥3.0B compared to a
¥37.1B profit a year ago.
Also the LCD panels used in rear
projection TVs and projector units failed to save the company, which
said demand for these products in the US fell well below expectations.
Seiko Epson “equal weight”
LONDON,
October – Analysts at Morgan Stanley maintain their “equal weight”
rating on Seiko Epson Corp. The target price is set to ¥2600.
In a
research note published this morning, the analysts mention that the
company has posted its 1H05 results in-line with expectations. Seiko
Epson expects the information-related segment to drive its profits in
H2 on account of growth in the consumables segment in Europe and the
introduction of new inkjet printers. The analysts says, however, that
the information-related segment is likely to post its results short of
the guidance in H2 due to limited demand for ink cartridge replacement
and a decline in the company’s market share and prices in Europe.
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