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http://www.barrons.com/articles/printer-makers-hurt-by-china-slowdown-1446044455
Oem Printer Sales Hurt by China Slowdown
Hp could show the same weakness in emerging markets that Canon, Lexmark and Xerox have reported.
By– Maynard Um– Munjal Shah — Jason NgA read-through from Canon, Lexmark and Xerox results shows our Hewlett-Packard printer forecasts look fine, if not conservative.
In the last two days, Canon [of Japan], Lexmark International (ticker: LXK ) and Xerox ( XRX ) have reported results that indicate printer-market trends are mixed, with developed-market demand stable though intensely competitive while emerging markets are being impacted by a slowdown in China as well as weakening currencies. These trends are expected to continue into the fourth quarter with potential for some improvement in 2016, though visibility remains low.
For the third quarter, Xerox noted its Document Technology sales were down 9% at constant currency and was slightly below expectations due to weakness in the emerging markets as well as the high-end segment while the developed markets were stable.
Lexmark’s laser hardware revenue/units were down 16%/11% year-over-year, respectively, with small work-group units impacted by competitive pricing and currency. Lexmark noted laser supplies were down 17% year-over-year but partially impacted due to channel inventory coming back to desired levels
Canon noted laser supplies sales remained firm in the third quarter supported by demand in the developed markets and expects them to be roughly flat year-over-year in the fourth quarter. The company introduced several new laser hardware products this year and expects these to drive supplies sales in 2016. In the inkjet market, Canon noted hardware sales were down though supplies sales remained solid. Canon expects its inkjet printer hardware sales to be down year-over-year in 2015 due to the emerging-market weakness.
While these results may suggest some softness, based on Canon and core Lexmark guidance (which tend to have a decent directional relationship with HP’s ( HPQ ) current-quarter performance), we feel comfortable with our October estimates for HP’s printing business. In fact, our forecast for HP’s October quarter Imaging and Printing Group sales to increase 2.8% year-over-year could be conservative versus Canon’s guidance for an increase of 12.6% sequentially in its December quarter and Lexmark’s 16.5% sequential-growth guidance.
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