Canon Releases Q3 2015 Results

[Canon Rumors]

<ul>
<li>Q3 operating profit falls 21 pct to 71.8 bln yen</li>
<li>Steep fall had been flagged by Nikkei business daily</li>
<li>Investments in new businesses also weighed on profit</li>
<li>Full-year earnings forecast lifted on weaker yen</li>
</ul>
<p>By Sophie Knight</p>
<p><strong>TOKYO, Oct 27 (Reuters)</strong> – Japan’s Canon Inc said quarterly operating profit fell by a fifth as demand for digital cameras slumped and it spent more on developing new businesses, but it nudged up its full-year earnings estimates on a sharply weaker yen.</p>
<p>The consumer shift to smartphones for casual photo taking has pummelled demand for compact cameras, while the growing popularity of lighter mirrorless cameras has taken away market share from higher margin single-lens reflex cameras.</p>
<p>Operating profit for the July-September quarter came in at 71.8 billion yen ($665 million), not far off figures flagged by the Nikkei business daily earlier this month.</p>
<p><a href="http://www.reuters.com/article/2014/10/27/canon-results-idUSL4N0SM25K20141027" target="_blank">Read More…</a></p>

 

[luminaeus]

Dilbert,

"It now expects 370 billion yen for the year to end December, up from a prior prediction of 365 billion yen and a 9.7 percent increase on the previous year."

I wouldn't worry too much about Canon.

 

[Loswr]

...while the growing popularity of lighter mirrorless cameras has taken away market share from higher margin single-lens reflex cameras.

This statement by a Reuters writer does not seem well-supported by the CIPA data. In 2014, dSLRs outsold MILCs by 3.2-fold units, 3.4-fold revenue. In Jan-Aug 2015, dSLRs outsold MILCs by 3.1-fold units, 3.2-fold revenue. That doesn't seem like significant growth in MILC popularity or loss in market share for dSLRs.

 

[unfocused]

...while the growing popularity of lighter mirrorless cameras has taken away market share from higher margin single-lens reflex cameras.

This statement by a Reuters writer does not seem well-supported by the CIPA data. In 2014, dSLRs outsold MILCs by 3.2-fold units, 3.4-fold revenue. In Jan-Aug 2015, dSLRs outsold MILCs by 3.1-fold units, 3.2-fold revenue. That doesn't seem like significant growth in MILC popularity or loss in market share for dSLRs.

Quit letting the facts get in the way of a good story. Don't you know Canon is doomed?

 

[Loswr]

Sorry, my bad. I can't wait for the liquidation sale!

 

[YuengLinger]

It ain't only Canon!

From yesterday's Wall Street Journal:

http://www.wsj.com/articles/u-s-companies-warn-of-slowing-economy-1445818298

 

[cbphoto]

I, for one, would love to see a Canon smartphone. Lotsa possibilities to interface with their gear.

 

[Talley]

Guys.... of course canon is slow right now. They are nearing the end of their aging FF camera cycle.

You watch. The release of the 5D4, 1DxII will respark sales and produce profits.

I understand that the cropper/rebel cameras make up most of the market for Canon but I suspect 2016 to be a bigger year for Canon.

 

[PureClassA]

Economies across the globe slowed significantly this year, so looking at Canon by itself is not giving the entire story. We would need numbers from Nikon and Sony to see if they also showed similar results in camera sales, which I suspect they did. Sony may prove to be an outlier only because a year ago they didn't have the breadth of product offers they do now. Again, that wouldn't necessarily indicate any growth they enjoyed was at the direct expense of competitors. Sony is more likely to gain the majority of its ground (if any) by attracting NEW people who otherwise would use iPhones vs. stealing away seasoned/Pro level DSLR users. Again, just a variety of educated guesses.

 

[unfocused]

Both Sony and Canon seem to have defined paths for themselves.

Sony seems to be on a path to dominate the imaging sensor market, hence the decision to create their Sony Semiconductor Solutions division.

No one should be under the illusion that cameras are anything more to Sony than a means to grab a little extra profit. If they were to get into a position where their camera division threatened their ability to market sensors to the rest of the industry, they'd exit the camera market in a minute, most likely by selling it off.

Canon will never exit the camera market, as it's a core business for them. But they are clearly looking to expand their reach into related industries -- such as security. They've weathered past downturns by relying on diversification. When the worldwide recession hit in the late 2000s, profits from their camera division helped prop up the business equipment division. Lately, their business products have been helping support the imaging division.

So, both companies seem to have a clear strategy for dealing with contraction of the digital camera market. I'm less familiar and have seen less coverage of Nikon, but I imagine they might be putting more emphasis on their optics division in the future. Their firearms scopes have been the subject of some negative publicity in the past, but they are apparently an industry leader in that area, and I know their binoculars are extremely popular among birders. Nikon doesn't strike me as a company that is as growth-oriented as Canon and Sony. But, rather seems content to rely on their solid customer base remaining a loyal source of revenue for the foreseeable future.

Just my opinion, others may have better understanding for information.

 

[CanonGuy]

Economies across the globe slowed significantly this year, so looking at Canon by itself is not giving the entire story. We would need numbers from Nikon and Sony to see if they also showed similar results in camera sales, which I suspect they did. Sony may prove to be an outlier only because a year ago they didn't have the breadth of product offers they do now. Again, that wouldn't necessarily indicate any growth they enjoyed was at the direct expense of competitors. Sony is more likely to gain the majority of its ground (if any) by attracting NEW people who otherwise would use iPhones vs. stealing away seasoned/Pro level DSLR users. Again, just a variety of educated guesses.

Surprisingly, a few of my fellow photographers (who were/still are canon user) picked up A7r ii while I haven't seen a single iphone user with sony cameras in hand (I shoot 25+ weddings each year, so yes I meet a lot of people and fellow photographers)!

Whilst sony is not yet matured enough for wedding photographers to jump ship fully, I'm seeing more and more photographers with a mirrorless FF sony body alongside to their canon body! Deny it as much as you want, it's happening. I'm waiting till 5d4 is announced, if it's not upto my expectation, my next pro body will not be a canon either.

I hope canon is listening. and happy clicking everyone.

 

[that1guyy]

Cannot say I'm surprised. I wonder if they will actually face a loss before they decide to create some good products.

 

[Mt Spokane Photography]

The slow down is very predictable, buyers are not shelling out big bucks for cameras. Cameras are over priced in todays market.

Canon is in a good position to lower prices and still make a profit due to their manufacturing processes being efficient. Still, there is a lot of cost that can be squeezed out of their processes. In house sensor production is likely costly, so they are looking at outside sources or production of sensors. They may very well continue R&D and design of sensors in house, but go to third parties for actual production. Just buying from Sony, or even buying Sony(Unlikely) might be a alternative.

Japan is going thru a labor crisis. There are not enough workers available to meet manufacturing needs. That's why companies move some production offshore, or to the US. Canon needs to take another look at their business model. That's hard to do, a new CEO who is a outsider and ruthless about cutting out fat would do wonders.

 

[Efka76]

I do not think that Canon is doomed, however, its position is not as strong as it was before. Of course, next year, when 5D Mark IV and 1DxII are introduced there should be a significant increase in Canon's sales and profits. Currently many loyal customers (loyalty is dependant on acquired number of Canon's lenses) are waiting for these cameras. Others ar buying 5DIII or 1Dx for very good price (but this results in lower Canon's margins).

Still I do not understand why FF cameras are so expensive. The 2 main components - sensor and processor should not be so costly due to amortised R&D costs. Currently it is possible to buy very very good laptop for 1500 EUR but you will not buy a good camera for that. I think that camera producers are still working in oligopoly conditions and have a significant possibilities to reduce costs and prices for their production. Sigma and Tamron practically overcoming Canon's lenses sales as they are able to produce very high quality lenses for 2x or even 3x less price. I am waiting when this will happen in camera business when Fuji, Sony or other company will significantly drop prices for cameras. CaNikon will have to follow....

Also, I am surprised that Canon is not making significant investments in mirrorless camera business. They already lost that opportunity. In the nearest future (2-4 years) mirrorless will become more and more sophisticated and will eat significant market share of traditional DSLR cameras. For exampl, introduction of Sony A7RII quite significantly shaked the whole market. Sony A7RIII or A7RIV will become very serious competitor for Canon and Nikon.

 

[unfocused]

...I do not understand why FF cameras are so expensive...Currently it is possible to buy very very good laptop for 1500 EUR but you will not buy a good camera for that.

I know that Europe is an anomaly in terms of camera pricing, but is the difference that great? And, is it the fault of camera manufacturers, or it it the result of other factors?

In the U.S. you can currently buy a 6D from an authorized dealer for $1,200 street price, which is about half what full frame cameras sold for just a few years ago. As far as a "good" camera goes, every DSLR made is good and the least expensive sell for under $500. If you want "very good" the 70D is $1,000 from authorized dealers and the incredible 7D II (mini 1Dx) is $1,350 street price from authorized dealer.

Also, I am surprised that Canon is not making significant investments in mirrorless camera business. They already lost that opportunity.

How, exactly, have they lost that opportunity? Mirrorless sales still amount to a small fraction of total camera sales and Canon is more than capable of getting into the market whenever they choose. Judging by the comments on this forum, most mirrorless buyers are keeping their Canon lenses. If Canon sees mirrorless as a threat and an opportunity, they have the resources to get into the market and dominate.

 

[canonic]

Canon is more than capable of getting into the market whenever they choose.

Rather, they are less capable and they can not choose ...

If Canon sees mirrorless as a threat and an opportunity, they have the resources to get into the market and dominate.

It Canon dont see this as a threat and/or opportunity, Canon is stupid!

 

[AvTvM]

Hehe! So my purchasing decisions are showing first effects! Have not bought new Canon stuff for more than a year now. And obviously it's not just me ... Canon does not make what i want, so I don't buy. As simple as that. No fully competitive, kick ass mirrorless APS-C body (EOS M). Even less a fully competitive kick-ass FF mirrorless system (bodies + lenses). Only minor iterations of low-DR sensored mirrorslappers? ... hasta la vista, baby!

 

[Loswr]

...Canon is more than capable of getting into the market whenever they choose. Judging by the comments on this forum, most mirrorless buyers are keeping their Canon lenses. If Canon sees mirrorless as a threat and an opportunity, they have the resources to get into the market and dominate.

+1

Consider that with a pretty limited investment (basically one current body and four lenses), Canon was 4th in market share last year, and has had the #2 best selling MILC in Japan.

 

[luminaeus]

Cannot say I'm surprised. I wonder if they will actually face a loss before they decide to create some good products.

How good do cameras have to be before you can take a decent photo?

 

[eninja]

I do not think that Canon is doomed, however, its position is not as strong as it was before. Of course, next year, when 5D Mark IV and 1DxII are introduced there should be a significant increase in Canon's sales and profits. Currently many loyal customers (loyalty is dependant on acquired number of Canon's lenses) are waiting for these cameras. Others ar buying 5DIII or 1Dx for very good price (but this results in lower Canon's margins).

Still I do not understand why FF cameras are so expensive. The 2 main components - sensor and processor should not be so costly due to amortised R&D costs. Currently it is possible to buy very very good laptop for 1500 EUR but you will not buy a good camera for that. I think that camera producers are still working in oligopoly conditions and have a significant possibilities to reduce costs and prices for their production. Sigma and Tamron practically overcoming Canon's lenses sales as they are able to produce very high quality lenses for 2x or even 3x less price. I am waiting when this will happen in camera business when Fuji, Sony or other company will significantly drop prices for cameras. CaNikon will have to follow....

Also, I am surprised that Canon is not making significant investments in mirrorless camera business. They already lost that opportunity. In the nearest future (2-4 years) mirrorless will become more and more sophisticated and will eat significant market share of traditional DSLR cameras. For exampl, introduction of Sony A7RII quite significantly shaked the whole market. Sony A7RIII or A7RIV will become very serious competitor for Canon and Nikon.

Hi, clearly you dont speak from business point of view, if you did, you would understand. Can are able to predict with great accuracy than anyone else regarding the number of people will buy their FF cameras. They will work on it in such a way they will profit.

Regarding lens price, they know which market they are targeting, why would they sell for less if people will buy for more. Again they target different market.

And how do you know Canon is not working on mirrorless dslr? its a different story when you say they are not working, and they ate not releasing. If you ask me, J wont release ace cards until needed.