Tags: economy | jamming | sales | printer

Economy Jamming Sales for Printer Giants

By    |   Monday, 12 Mar 2012 08:20 AM

Printer makers Xerox (XRX), Pitney Bowes (PBI) and Canon (CAJ) do a lot more than manufacture office printers. These days, they manage documents and provide a host of value-added services. Yet the economy is jamming sales for the printer giants.

The European debt crisis and U.S. economic uncertainty are keeping many businesses on the sidelines, sitting on hoards of cash and waiting for better times to return before they invest and hire. Less business means less demand for documents, printing and content-management services, and that's showing up in the top line for printer makers.

Take Xerox. The bottom line is climbing, thanks to good business practices, but a weak economy is crimping revenue. Fourth quarter profits at Xerox rose to $375 million, more than double the $171 million reported a year ago, thanks to past restructuring moves and pension adjustments. Revenue hit $5.96 billion, slightly down from $5.98 billion a year ago.

Business slowed as the European debt crisis cooled global business spending and investment.

"While operating in a challenging economic environment, we’ve grown our global market share for equipment revenue, further strengthening our industry leadership," says Xerox Chairman and CEO Ursula Burns.

For 2012, Xerox expects earnings to be between $1.12 and $1.18 per share, exceeding many analysts' forecasts.

Meanwhile, Pitney Bowes saw revenue dip 6.5 percent on year to hit $1.3 billion in the fourth quarter, mainly due to lower sales to small and medium-sized business, while bigger entities put pending sales on hold.

Blame a shaky global economy here as well. "Persistent economic uncertainty worldwide resulted in some of our customers deferring new equipment purchases and capital investments in the second half of the year," says Chairman and CEO Murray D. Martin.

Fourth quarter profits grew to $257.5 million, well up from $63 million a year ago thanks to tax benefits from discontinued operations.

Asian printing and electronics giant Canon, meanwhile, battled the horrible Japanese earthquake in 2011, a shaky global economy and a strong yen, which is dampening exports.

"As for the outlook in 2012, the future remains increasingly uncertain amid growing concern over a global economic slowdown due to a lack of progress in resolving the euro debt crisis," the company reports in an earnings statement.
Fourth quarter net income came to $787.7 million, up 13.9 percent. Net sales decreased 9.7 percent to $12.37 billion.

"In the United States, barring any radical improvement in unemployment conditions and housing problems, the economy is expected to realize only moderate growth. In Europe, the top priority is to contain the debt crisis, with the economy expected to be stagnant for the time being," the company adds.

Out of ink


Analysts aren't buying the argument that things will get much better in 2012, although investors should keep an eye on share prices for bargain buying.
Barclays Capital slapped a downgrade on its Xerox recommendation, moving the stock to equal weight and overweight earlier this year. Canon got hit with a slew of downgrades two years ago and hasn't seen many recommendations recently.

Brean Murray Carret in February reiterated a buy rating on Pitney Bowes. 

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2012-20-12
Monday, 12 Mar 2012 08:20 AM
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