No surprise here. No even a whisper from Canon, world’s leading camera manufacturer. Everyone moves upscale and announces quality gear. Nothing from Canon. With the result that Canon cuts its annual profit forecast and predicts its first drop in sales of models with an interchangeable lens as consumers switch to smartphones to take photos. First drop ever of Canon DSLR sales. That should raise red flags at the headquarters of the company founded in 1933 in a Tokyo apartment.
Smartphones are eating into digital camera sales as companies such as Apple and Sony release new handsets with stronger built-in lenses and sensors to lure shoppers, reports Bloomberg. The value of worldwide camera shipments dropped 19% in August from a year earlier, a ninth consecutive monthly decline, according to the Camera & Imaging Products Association CIPA in Tokyo.
Canon’s “downward revision is larger than expected and will have a negative effect on Canon’s stock price,” says a fund manager in Tokyo. “Smartphones are creating a structural problem for camera manufacturers.”
An analyst expects the decline in demand for interchangeable lens camera to soon reverse. “It’s a temporal decline and we expect demand to pick up next year as the global economy recovers,” is quoted. Not sure I agree. Looks more like a structural problem to me. Adds Reuters:
The high-margin interchangeable lens format favored by professional photographers and enthusiasts has seen growth every year up to 2012 (…) sales of its signature high-end cameras will fall this year for the first time since their launch in 2003.
Canon’s compact camera sales have long been hit by the boom in demand for smartphones that take photos. But the company left its 2013 sales forecast for compact cameras unchanged at 14 million, against 18.3 million in 2012. And now the cash cow segment is hit.
The dire Canon earnings report is being cushioned partly by cost reductions at Canon and a weaker Japanese yen. The lower currency boosts the repatriated value of Japanese exporters’ overseas earnings. Imagine what a stronger Yen would do to Canon.
The third quarter still sees an operating profit despite weaker sales. Operating income at the imaging system division, which handles cameras, rose 8.2% to 56.9 billion yen in Q3 as revenue gained 8.2%. Again, we’re talking mostly currency revaluations.
The company’s most profitable division seems to be the office products unit making copiers and multi-function printers. Only a few days ago, before the negative earnings call, Wall Street rated Canon as a buy.