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Office Productivity: The Better Buys Editor's Blog

Canon Has A Rough Quarter

Nov 10, 2008

Canon Inc., the Japanese parent of Canon America, recently announced its first quarterly decline in profit in nine years, down 21 percent from the previous quarter. The company also adjusted its 2008 profit outlook by 25 percent. Furthermore, it specified that 2009 profits might be down even more.

The biggest factor for Canon is the rise in the value of the yen, while most other world currencies have declined. That makes manufacturing and research much higher for all Japanese-based companies. Canon’s profit estimates were based on a significantly higher dollar and euro exchange rate versus the yen.

Another key factor is the world economic slowdown, a situation where businesses are putting off their copier and printer replacements (an industry in which Canon is by some measures #1). In addition, consumers are thinking twice about buying digital cameras (Canon is #1 in that industry as well).

Finally, Ricoh‘s purchase of IKON Office Solutions (just completed) cuts off a major North American sales channel for Canon, whose products were the biggest sellers at IKON. Canon has to scramble to restructure both its dealer chain and its direct sales and service operations. Not an easy task when credit is tight and demand is down.

Canon is still profitable and has some maneuvering room, but this is going to be a tough time for them. The only consolation is that many of its rivals are likely to see declining sales and higher costs as well.




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