Bad news for Canon's business model...

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Marco Nero
Marco Nero Veteran Member • Posts: 6,225
Bad news for Canon's business model...

"According to a report from Nikkei Asian Review, Canon’s operating profit is set to drop 40 percent this year; double the percentage Nikkei said Canon had anticipated its profits to drop earlier this year.

Back in April, Nikkei reported Canon was planning to lower its profit forecasts for the 2019 fiscal year by 20 percent—approximately 50 billion yen—due to ‘shrinking camera sales.’ The translate report from April reads:

‘Canon will lower its forecast for the fiscal year ending December 2019. Consolidated operating profit (US GAAP), which indicates the mainstay of the business, is likely to decrease by 20% over the previous fiscal year to just over 270 billion yen. About 50 billion yen lower than the previous forecast. The shrinking of the digital camera market and the deterioration of the semiconductor market due to the functional improvement of smartphones (smartphones) will hit hard.’

The new report from Nikkei says the publication ‘has learned’ Canon’s fiscal year profit is set to decrease twice the amount initially reported in April, due to ‘a slowing European economy and slumping chip market.’ Nikkei writes in its report:

‘Canon‘s operating profit is on track to sink 40% this year to slightly over 200 billion yen ($1.85 billion), Nikkei has learned, amid a slowing European economy and slumping chip market.*

The Japanese company’s profit for the year ending in December is seen falling roughly 60 billion yen short of its downgraded guidance in April. Sales likely will shrink 6% to a figure above 3.7 trillion yen, off about 100 billion yen from April’s forecast. The full-year projections are expected to be lowered again when Canon presents first-half earnings next week.’

The report goes on to say Nikkei expects Canon will further drop its profit projections during its first-half earnings presentation next week and will ‘report a first-half operating profit of around 80 billion yen, down 50% from a year earlier, with sales slipping 10% to roughly 1.7 trillion yen.’

With companies like Sony selling their sensors to Apple for use in their iPhones, the Smartphone Market is crushing camera manufacturers (though Sony's business model ensures them with an income that Canon haven't exploited). Canon may have missed an opportunity to keep themselves in the safe zone. Expect the majority of DSLRs to be abruptly discontinued. Canon simply can't continue to sell so many different models at the same time any more.
Some of the comments in the linked DPreview article are also worth a look. See link above... Canon won't be able to continue to play with half-measures any more. Either things will get pretty serious or they'll take quite a fall as a result of dropping the ball. Was that figure really 40% loss of profits? Jeepers!

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