Imaging Index: A Financial wrap-up of this month's document technology market16 Mar, 2005 By: Mike Dudek imageSource
Imaging Index: A Financial wrap-up of this month's document technology market
Each month we track changes in stock values of major public players in the
imaging industry. The following chart depicts the change in value from September
30, 2004 to January 31, 2005.
Adobe (15 percent), Global Imaging (15 percent), Xerox (13 percent), and Canon
(11 percent) have all experienced double-digit appreciation, while Danka (-31
percent) and IKON (-11 percent) have taken substantial hits during the last four
Latest Industry Developments
Danka: Announced third quarter revenue
of $314 million—a 5.2 percent decline; an operating loss of $4.2 million, and
net earnings of $4.5 million. However, net earnings benefited $19.8 million from
tax settlements in its European operations. Total revenue declined 9.3 percent
after adjusting for a positive currency exchange rate. Opinion: These
results were not received kindly by the market. In fact, Danka’s stock continued
to decline in early February. The company continues to experience difficulty in
stabilizing its core business.
IKON: Reported first quarter revenue
of $1.1 billion, representing a decline of 3.6 percent. Earnings for the company
have declined by 40 percent to $16.6 million from $27.6 million. The majority of
the revenue decline was attributed to the decline of finance revenue resulting
from the sale of its leasing company to GE. Opinion: IKON will continue
to experience revenue and earnings shortfalls in future quarters and years due to the disposition of its leasing company. One
primary reason for future shortfalls in profitability is that GE will control
the lucrative lease-end opportunities that represent substantial profit that
IKON previously held captive.
Reported record revenue of $234 million, which is an increase of 25 percent, and
record net income of $14.9 million, an increase of 26 percent. Internal growth
was reported at 5 percent. Global announced Mike Shea as its new president, Dan
Boylan as president of its Southern Business Group, and Richard Peterson as
president of The Reed Group. Opinion: Global continues to beef up its
management team to lead and control its expanding business. All three of these
executives have experience running operating companies and all had previously
worked with industry manufacturers. Shea previously owned and operated
Connecticut Business Systems, which was acquired by Global, and previously
worked with Savin. Boylan previously was an IKON executive before working for
Sharp Electronics. Peterson had been president of Global’s Amcom and previously
worked with Konica.
Xerox: Announced quarterly revenue of
$4.3 billion, which is an increase of 1 percent, and full-year revenue of $15.7
billion, which is flat from the prior year. Color represents about 27 percent of
the company’s total revenue. Production equipment revenue increased 10 percent.
Xerox reported weak performance in Brazil and noted that it has implemented a
two-tier distribution strategy to drive growth. Xerox recently appeared at the
ITEX tradeshow and was busy signing up new dealers for its 28-speed equipment
and below. Prediction: Xerox will continue to diversify its distribution
channels to stimulate future revenue growth. Xerox needs to make bolder moves
than signing up dealers for its 28 ppm units.
Canon: Reported record annual revenue of $33.3 billion, an increase of 8.4
percent, and net profit of $3.3 billion, an increase of 24.5 percent.
Reported annual revenue of $5.3 billion, a12 percent increase, and EPS rose 28
percent. Laser and inkjet printer revenue increased 16 percent, while supplies
increased 13 percent.
HP: Chairwoman and CEO Carly Fiorina stepped down. Critics complained
about the lack of success associated with the acquisition of Compaq and
Fiorina’s lack of operational ability to integrate the two giants.
Electronics For Imaging:
Announced annual revenue of $395 million, a four percent increase, and net
income of $38 million compared to $26.5 million the prior year. EFI also
announced alliances with Digital Gateway (e-automate) business management
software, and BEI Services to deliver service benchmarking data.
Reported annual revenue of €2,652 million and net income of €78 million.
ITEX: The ITEX Show was held in early February 2005 in Las Vegas. This event
grew substantially from the prior year from every perspective. We saw more
manufacturers, more technology companies and many more dealers—all exchanging
information about new trends and industry developments and solutions. We look
forward to next year’s show, which will be held in March 2006.
Mike Dudek, the “AcquisitionGuy.com” is the
President and Owner of Zygoquest Group and the #1 authority on mergers and
acquisitions in the office products, document-services and telephony industry.
Mike has consummated over 300 transactions with aggregate revenues over $2
billion. Zygoquest Group provides customized acquisition services to buyers and
sellers, advising entrepreneurial owners through the entire acquisition life
cycle or specific transaction aspects. Zygoquest assists entrepreneurs engaged
in selling their company or contemplating future disposition to position their
company to maximize exit value and minimize post-sale risk. Contact Dudek at
610.873.6555; e-mail: firstname.lastname@example.org; or visit www.zygoquest.com.