Looking over the recent results of various hardware vendors for the second half of 2013, it is clear that the industry is seeing new signs of life. \u00a0Many companies are reporting that sales are up modestly compared to last year along with profits, and those that did not experience an overall improvement were able to identify certain bright spots in the market that are providing growth. \u00a0Although the news is good, however, it is far from great and business at most companies remains well below from where it was before the recession. \u00a0I guess it is safe to say that we still have a ways to go to get back to the high-water mark set in 2008-2009.<\/p>\n
But I don\u2019t want to sound too gloomy. \u00a0As October came to a close, many printer and copier vendors reported that business was up at their respective companies during the three months that ended on September 30 compared to the same period last year, and some were predicting higher total revenue for the current fiscal year than last year. \u00a0This was especially true for Japanese companies as they continue to benefit from the declining yen. \u00a0While the performance of U.S. hardware vendors lags that of their Japanese rivals, certain market segments demonstrated decent growth for U.S. companies and that growth should last through the end of the year.<\/p>\n
Weak Yen=Strong Growth<\/strong><\/p>\n Japanese manufacturers can thank Prime Minister Shinzo Abe for many of the gains they are enjoying this year. \u00a0Since Mr. Abe\u2019s election in November 2012, the yen has dropped from the 80 to the 100 level against the US dollar. \u00a0Working with the Bank of Japan, the prime minister has implemented the monetary and fiscal policies that have come to be known as \u201cAbenomics,\u201d which are designed to encourage private investment and end the doldrums the Japanese economy have suffered since the 1990s. \u00a0\u00a0A weaker yen is a part of the Abe plan and while the currency did show some signs of strengthening during the summer, it appears the yen will remain weak into 2014, which is great news for Japanese vendors.<\/p>\n Three of Japan\u2019s most troubled hardware vendors\u2014Epson, Oki, and Ricoh\u2014saw improvements during their most recent quarters. \u00a0Of the three, Ricoh\u2019s recovery appears to be on the most solid footing. The company has been on a roll during 2013. Earlier this year, Ricoh said its business had improved during the quarter ending on June 30 and it managed to offer more good news to investors for the quarter ending in September. \u00a0While revenue from office imaging products grew almost 13 percent thanks to the weaker yen, not all of Ricoh\u2019s growth is attributable to favorable currency exchange rates. \u00a0The company enjoyed year-over-year growth in total company sales and \u00a0in its production printing business sales on a constant currency basis. Ricoh raised its revenue forecast for the full year.<\/p>\n Epson<\/strong> says it is now delivering on the firm\u2019s promise to revive its inkjet business. \u00a0In March, the company announced a new business plan that would put it back in the black and in the first quarter, which ended on June 30, Epson reported revenue growth and turned its operating and net losses into profits. \u00a0Epson\u2019s net sales were up another 23 percent in the second quarter compared to the same quarter last year, and operating income grew a whopping thirteen-fold year-over-year. \u00a0For the first six months of the year, Epson saw dramatic improvement in net sales and in every income category. \u00a0Unit shipments of Epson\u2019s inkjet printers declined worldwide, but held steady in certain key markets including North America. \u00a0Despite the overall decrease in inkjet printer shipments, net sales in this category increased due to the yen\u2019s depreciation, improved model mix, and a rise in average selling prices. \u00a0The company recently raised its sales and profit forecast for the current year.<\/p>\n Like Epson, Oki<\/strong> also announced a turnaround strategy earlier this year. \u00a0And it appears the plan has begun to stem the printer business\u2019 steep operating losses, while the depreciating yen has further helped the firm along. \u00a0During the first half of Oki\u2019s fiscal year, which ran from April 1 through the end of September, net sales were up 6.5 percent compared to the first half of the previous fiscal year. \u00a0However, the improvement in revenue in the printer business does not actually mean that Oki is actually selling more printers. \u00a0Revenue is up mostly thanks to the favorable currency exchange. \u00a0Unit shipments of Oki\u2019s core LED printers decreased during its most recent quarter, while the launch of new LED devices designed for the copier market progressed. \u00a0Nonetheless, Oki has raised its guidance for the year and anticipates higher sales as a result of sales of new copiers that were recently released along with new products for the professional markets.<\/p>\n Good News, Bad News<\/strong><\/p>\n Although Konica Minolta<\/strong> reported that its net sales were up nearly 20 percent during its most recent quarter compared to last year, net income declined year-over-year because of the firm\u2019s decision to withdraw from the HDD glass substrates market. \u00a0The firm is exiting the business due to declines in shipments and profits resulting from increasing storage capacity on HDDs, a decline in the notebook PC market, and the rise of new recording technologies. \u00a0The exit will come quickly, with Konica Minolta ending production this November and ceasing sales in December.<\/p>\n Sales soared, however, in Konica Minolta\u2019s Business Technologies business segment, which is responsible for marketing MFPs, copiers, printers, supplies, and related services such as Konica Minolta\u2019s Optimized Print Services (OPS). \u00a0Net sales jumped more than 30 percent from the year-ago period and operating income skyrocketed nearly 65 percent. \u00a0In addition to the weak yen, the firm says it has experienced strong sales of color MFPs and has benefited from recent merger-and-acquisition activity, particularly in the firm\u2019s services business and its production printing business. \u00a0In constant currency, the group\u2019s net sales increased 9 percent in the first half.<\/p>\n Konica Minolta adjusted its forecast to account for the strong performance of its Business Technologies Business and the weak yen, as well as to make allowances for exiting from the HDD glass substrates space. \u00a0The company revised upward its net sales and operating income projections for the current fiscal year, but lowered its outlook for net income.<\/p>\n Despite reporting top- and bottom-line growth in the third quarter, which ended on September 30, Canon<\/strong> appears to be feeling uncertain about overall 2013 economic conditions. \u00a0The firm has cut its forecast for the full fiscal year once again, after doing the same in July. \u00a0Canon\u2019s woes are related more to its camera business than to printers and copiers, however. \u00a0The firm\u2019s compact digital camera business has been hit hard by the adoption of smartphones. \u00a0Canon expected a rebound in demand for its higher-end interchangeable-lens digital cameras, but that rebound did not materialize outside of Japan and unit shipments of these high-end cameras were down 3 percent in the third quarter.<\/p>\n Net sales in Canon\u2019s Office Business Unit, which sells office multifunction devices (MFDs), laser printers, laser MFPs, digital production printing systems, continuous-feed printers, wide-format printers (other than inkjet), and document solutions, were up over 20 percent and the group\u2019s operating profit improved a robust 63.1 percent compared with the year-ago period. \u00a0Canon indicated that sales of its color office MFDs grew, and color copier volumes were up 9 percent year-over-year along with net sales, which were up nearly 17 percent. \u00a0Monochrome MFDs unit sales shrank 7 percent year-over-year, while net sales of monochrome copiers increased 15.8 percent. \u00a0Demand for laser printers grew and Canon said laser MFPs saw strong growth. \u00a0Color printer unit sales were up 31 percent and monochrome printer units grew 22 percent compared with the year prior. \u00a0Inkjet printer unit sales declined by 2 percent in the third quarter but increased 19.2 percent thanks to the weaker yen.<\/p>\n While sales of most printers and copiers were up, Canon is not as bullish about 2013 as it was back in January. \u00a0The firm raised its outlook after reporting its first-quarter results in April and then lowered its forecast when reporting second-quarter results, as economic conditions did not improve as much as the firm had hoped and its camera business continued to wither throughout the year. \u00a0After lowering its forecast once again in Q3, Canon said it expects only moderate growth for the worldwide economy due to the sluggish markets in Europe and the declining growth rates in emerging economies.\u00a0 Canon now expects continued increased demand for MFDs, especially color devices, and laser printers in the fourth quarter, but it is not holding out high hopes for demand for digital cameras or inkjet printers. \u00a0The firm added that its consumer business might be adversely impacted by uncertain outlook for the year-end shopping season.<\/p>\n Not So Good At Home<\/strong><\/p>\n News from the U.S about the quarter ending at the close of September was nowhere as upbeat as what we heard from Japan. \u00a0It appears that any momentum Xerox gained in the second quarter petered out in Q3 and, while Lexmark managed to beat Wall Street\u2019s expectation, sales were down in the quarter.<\/p>\n In the third quarter, Xerox<\/strong> reported that 56 percent of its revenue came from the services business, which was up from 51 percent in 2012. \u00a0While total services revenue was up 3 percent, margins were flat at just under 10 percent.\u00a0 CEO Ursula Burns said, \u201cWe have passed the tipping point in revenue, but still have work to do on margin.\u201d \u00a0Total company equipment sales were up only 1 percent. \u00a0However, Xerox said this figure included a 1-percentage-point positive impact from currency exchange making hardware sales flat overall. \u00a0Sales of unbundled supplies and paper were down 4 percent because of lower \u201cchannel supplies inventories in the U.S. as well as moderately lower supplies demand,\u201d according to the firm. \u00a0In the fourth quarter, Xerox expects document technology revenue to decline in the mid-single digits along with a lower operating margin and the firm anticipates \u201ca bit more pressure in developing markets.\u201d<\/p>\n Lexmark\u2019s<\/strong> total revenue for the third quarter was down 3.1 percent but the decline was better than the 4-6 percent decline Lexmark forecasted at the end of its second quarter.\u00a0 Profitability improved in the third quarter as Lexmark\u2019s gross profit margin grew to 38.9 percent versus 35.7 percent one year ago and operating income margin reached 5.9 percent versus just 1.3 percent.<\/p>\n For the past couple of years, Lexmark has seen its hardware unit shipments drop. \u00a0In large part, this decline was due to the firm\u2019s ailing inkjet business, which has since been jettisoned, but now it appears that the firm\u2019s laser business is also declining. \u00a0Lexmark saw a 20 percent year-over-year decrease in laser hardware unit sales in the third quarter. \u00a0Unit shipments of large workgroup laser hardware declined less precipitously than those of small workgroup\/ personal devices at -14 percent and -27 percent, respectively.<\/p>\n Presumably, the shift to higher end unit sales helped increase average unit revenue (AUR), which was up 21 percent in the third quarter. \u00a0Although the firm saw a 20 percent decrease in unit sales, laser hardware revenue declined a more modest 3 percent thanks to the improved AUR. \u00a0A 17 percent uptick in AUR for large workgroup products allowed the revenue in this category to actually increase 1 percent. \u00a0Meanwhile, AUR for small workgroup products increased a more modest 11 percent, and small workgroup hardware revenue declined 19 percent.<\/p>\n Looking ahead, Lexmark said it expects total revenue to decline 3 to 5 percent year-over-year in the fourth quarter, and its revenue excluding inkjet exit revenue, flat to up 2 percent.<\/p>\n All Eyes On HP<\/strong><\/p>\n As we went to press, several companies including Brother and Sharp had yet to report, but I think the results we have indicates the overall trend for the year.\u00a0 For the most part, the industry is experiencing some level of growth albeit the growth remains anemic in certain segments. Japanese firms ought to continue through the end of the year to see top- and bottom-line growth, as the yen remains depressed. \u00a0Of course, any growth could be threatened if vendors attempt to gain market share by slashing prices or if the Japanese government decides to raise the value of the yen. \u00a0Overall, the Japanese companies are doing better but more improvement is required.<\/p>\n It will be interesting to see Hewlett-Packard\u2019s quarterly results, which should be out in mid-November. \u00a0The firm\u2019s fiscal year runs from November 1 until October 31 so it will be reporting its full year results. \u00a0With its large market share and positions in so many segments, HP\u2019s printer business acts as a proxy for the industry at large. \u00a0Its financial results for the year ought to be a harbinger of how the larger industry will do this year. \u00a0This is especially true for U.S. firms, which are not feeling the direct benefit of a weaker yen. \u00a0During the summer, HP reported that its hardware shipments were up but printer revenue was down along with operating margins. \u00a0I expect the results will be about the same for HP\u2019s printer business in the last quarter\u2014revenue flat or declining with little or no improvement to profitability. This would be in line with Lexmark and Xerox\u2019s recent results.<\/p>\n So, it looks like the industry will continue to see some improvement but the gains are coming slowly, when they come at all. \u00a0Like I said at the beginning of this piece, we have a long way to get back to the high-water mark the industry experienced just before the recession.<\/p>\n","protected":false},"excerpt":{"rendered":" Looking over the recent results of various hardware vendors for the second half of 2013, it is clear that the industry is seeing new signs of life. \u00a0Many companies are reporting that sales are up modestly compared to last year along with profits, and those that did not experience an overall improvement were able to identify certain bright spots in the market that are providing growth. \u00a0Although the news is good, however, it is far from great and business at most companies remains well below from where it was before the recession. \u00a0I guess it is safe to say that we still have a ways to go to get back to the high-water mark set in 2008-2009. But I don\u2019t want to sound too gloomy. \u00a0As October came to a close, many printer and copier vendors reported that business was up at their respective companies during the three months that ended on September 30 compared to the same period last year, and some were predicting higher total revenue for the current fiscal year than last year. \u00a0This was especially true for Japanese companies as they continue to benefit from the declining yen. \u00a0While the performance of U.S. hardware vendors lags that of their Japanese rivals, certain market segments demonstrated decent growth for U.S. companies and that growth should last through the end of the year. Weak Yen=Strong Growth Japanese manufacturers can thank Prime Minister Shinzo Abe for many of the gains they are enjoying this year. \u00a0Since Mr. Abe\u2019s election in November 2012, the yen has dropped from the 80 to the 100 level against the US dollar. \u00a0Working with the Bank of Japan, the prime minister has implemented the monetary and fiscal policies that have come to be known as \u201cAbenomics,\u201d which are designed to encourage private investment and end the doldrums the Japanese economy have suffered since the 1990s. \u00a0\u00a0A weaker yen is a part of the Abe plan and while the currency did show some signs of strengthening during the summer, it appears the yen will remain weak into 2014, which is great news for Japanese vendors. Three of Japan\u2019s most troubled hardware vendors\u2014Epson, Oki, and Ricoh\u2014saw improvements during their most recent quarters. \u00a0Of the three, Ricoh\u2019s recovery appears to be on the most solid footing. The company has been on a roll during 2013. Earlier this year, Ricoh said its business had improved during the quarter ending on June 30 and it managed to offer more good news to investors for the quarter ending in September. \u00a0While revenue from office imaging products grew almost 13 percent thanks to the weaker yen, not all of Ricoh\u2019s growth is attributable to favorable currency exchange rates. \u00a0The company enjoyed year-over-year growth in total company sales and \u00a0in its production printing business sales on a constant currency basis. Ricoh raised its revenue forecast for the full year. Epson says it is now delivering on the firm\u2019s promise to revive its inkjet business. \u00a0In March, the company announced a new business plan that would put it back in the black and in the first quarter, which ended on June 30, Epson reported revenue growth and turned its operating and net losses into profits. \u00a0Epson\u2019s net sales were up another 23 percent in the second quarter compared to the same quarter last year, and operating income grew a whopping thirteen-fold year-over-year. \u00a0For the first six months of the year, Epson saw dramatic improvement in net sales and in every income category. \u00a0Unit shipments of Epson\u2019s inkjet printers declined worldwide, but held steady in certain key markets including North America. \u00a0Despite the overall decrease in inkjet printer shipments, net sales in this category increased due to the yen\u2019s depreciation, improved model mix, and a rise in average selling prices. \u00a0The company recently raised its sales and profit forecast for the current year. Like Epson, Oki also announced a turnaround strategy earlier this year. \u00a0And it appears the plan has begun to stem the printer business\u2019 steep operating losses, while the depreciating yen has further helped the firm along. \u00a0During the first half of Oki\u2019s fiscal year, which ran from April 1 through the end of September, net sales were up 6.5 percent compared to the first half of the previous fiscal year. \u00a0However, the improvement in revenue in the printer business does not actually mean that Oki is actually selling more printers. \u00a0Revenue is up mostly thanks to the favorable currency exchange. \u00a0Unit shipments of Oki\u2019s core LED printers decreased during its most recent quarter, while the launch of new LED devices designed for the copier market progressed. \u00a0Nonetheless, Oki has raised its guidance for the year and anticipates higher sales as a result of sales of new copiers that were recently released along with new products for the professional markets. Good News, Bad News Although Konica Minolta reported that its net sales were up nearly 20 percent during its most recent quarter compared to last year, net income declined year-over-year because of the firm\u2019s decision to withdraw from the HDD glass substrates market. \u00a0The firm is exiting the business due to declines in shipments and profits resulting from increasing storage capacity on HDDs, a decline in the notebook PC market, and the rise of new recording technologies. \u00a0The exit will come quickly, with Konica Minolta ending production this November and ceasing sales in December. Sales soared, however, in Konica Minolta\u2019s Business Technologies business segment, which is responsible for marketing MFPs, copiers, printers, supplies, and related services such as Konica Minolta\u2019s Optimized Print Services (OPS). \u00a0Net sales jumped more than 30 percent from the year-ago period and operating income skyrocketed nearly 65 percent. \u00a0In addition to the weak yen, the firm says it has experienced strong sales of color MFPs and has benefited from recent merger-and-acquisition activity, particularly in the firm\u2019s services business and its production printing business. \u00a0In constant currency, the group\u2019s net sales increased 9 percent in the first half. Konica Minolta adjusted its forecast to account for the strong performance […]<\/p>\n","protected":false},"author":58,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1649,1814,1642],"tags":[],"_links":{"self":[{"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/posts\/9049"}],"collection":[{"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/users\/58"}],"replies":[{"embeddable":true,"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/comments?post=9049"}],"version-history":[{"count":2,"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/posts\/9049\/revisions"}],"predecessor-version":[{"id":9051,"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/posts\/9049\/revisions\/9051"}],"wp:attachment":[{"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/media?parent=9049"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/categories?post=9049"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/tags?post=9049"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}