Tea Leaves...Canon Q1 2008 Financial Results

[BruceHouston]

Hi All,

FYI Canon's Q1 financial results at:

http://www.canon.com/ir/conf2008q1/conf2008q1e.pdf

(1) Sales of Canon products overall are flat from last year but operating profit is down by about 18%.

(2) Camera sales are flat but operating profit is down by about 25%!

(3) DSLRs accounted for 12% of the unit volume of digital cameras for the quarter but 38% of the dollar volume of all digital cameras.

(4) Canon projects that DSLRs will account for 15% of the unit volume of all Canon digital cameras sold in Canon FY 2008 and 42% of the dollar volume.

So, it appears that the DSLR market is increasingly important to Canon as compared to the P&S market.  Unfortunately, the slides do not break out the DSLR contribution to operating profit.  (In fact, Kudos to Canon for breaking out their numbers as nicely as they did in this report.)  Hopefully DSLR body and lens quality will not suffer as Canon cost-reduces in an effort to triage the 25% reduced operating profit from total digital camera sales experienced in Q1 2008.

Any other thoughts/interpretations from these results?

Bruce

[budjames]

I think that Canon's quality has already slipped. The last 2 "L" lenses that I bought had to be sent back for calibration out of the box because they were not sharp.

Furthermore, with all of the reported issues with focusing on the latest 1D MkIII, I held off buy the new 1Ds MkIII. Based on complaints of similar issues that I've seen posted on these boards and elsewhere, it sounds like there have been similar problems with the 1Ds MkIII, so I'm glad I waited.

I'm a firm Canon fan since my first 35mm camera in high school (1973). It was a Canon FTb. But, with the obsolescence cycle of today's DSLRs, I cannot help but be concerned that random quality issues are becoming a fact of life with today's products. That said, I'm sticking with today's technology, because I'm not going back to film ever.

Bud James

[Alistair]

Any other thoughts/interpretations from these results?

Bruce
[a href=\"index.php?act=findpost&pid=193726\"][{POST_SNAPBACK}][/a]

THanks for the link Bruce. My reading of it shows up the biggest factor in sales and profit variances as being exchange rate fluctuations. Most of their sales are in USD while a lot of their costs are still in Yen. That has been pretty tough on them as the USD weakens. Hard to draw conclusions on underlying strength of their product sales without unit volumes.

[Stuarte]

THanks for the link Bruce. My reading of it shows up the biggest factor in sales and profit variances as being exchange rate fluctuations. Most of their sales are in USD while a lot of their costs are still in Yen. That has been pretty tough on them as the USD weakens. Hard to draw conclusions on underlying strength of their product sales without unit volumes.
[a href=\"index.php?act=findpost&pid=193739\"][{POST_SNAPBACK}][/a]

That was my thought too.  "Endaka" or strong yen makes a big difference.

[jani]

Yep, the weak US dollar is probably much at fault here. See also the announced US price increase this year from Canon; they're obviously feeling the heat.

From 2007-01-01 to 2007-12-31, the US dollar lost more than 10% value against the Eurodollar. In Q1 2008, the dollar lost an additional 7%.

Japanese yen vs. Eurodollar has bounced up and down during 2007, but was up almost 5% at the end of the year. By the end of Q1 2008, though, the yen was down to about the same as in January 2007.

So in Q1 2008, there doesn't appear to be much difference between JPY and USD, but I suppose Canon now sees the result of what's happened in 2007.

[JDClements]

Profits are down all over the place because the cost of raw materials such as plastics and metals are UP. Way up. Rising prices to follow.

[atassy]

Yep, the weak US dollar is probably much at fault here. See also the announced US price increase this year from Canon; they're obviously feeling the heat.

From 2007-01-01 to 2007-12-31, the US dollar lost more than 10% value against the Eurodollar. In Q1 2008, the dollar lost an additional 7%.

Japanese yen vs. Eurodollar has bounced up and down during 2007, but was up almost 5% at the end of the year. By the end of Q1 2008, though, the yen was down to about the same as in January 2007.

So in Q1 2008, there doesn't appear to be much difference between JPY and USD, but I suppose Canon now sees the result of what's happened in 2007.
[a href=\"index.php?act=findpost&pid=194076\"][{POST_SNAPBACK}][/a]

eurodollar? i wonder what currency charts/financial reports you found this in... can't think of any place where you can pay with that thing