Canon Reports 29 Percent Drop in Q1 Profit as Compact Camera Sales Slump

[Canon Rumors Guy]

Canon Inc on Monday said net profit fell 28.7 percent in its first quarter, falling short of analyst estimates, as the Japanese company faced slumping sales of digital compact cameras.</p>
<p>Profit was JPY 33.93 billion ($285.27 million) in January-March, compared with the JPY 53.64 billion average estimate of 5 analysts according to Thomson Reuters data.</p>
<p>The result comes as the world’s biggest camera maker seeks growth opportunities, in part to offset a drop in demand for compacts as consumers increasingly rely on smartphone cameras.</p>
<p>It plans to buy Swedish surveillance firm Axis AB for $2.7 billion – offering 340 crowns ($39.31) a share until the extended deadline of May 5 – and as of Friday owned 84 percent. It does not plan to up its offer even though hedge fund Elliott Management has since raised its ownership to 10 percent.</p>
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<p>“Sales volume for low-end (digital camera) models declined due to the ongoing contraction of the market in all regions from the previous year,” said Canon in its earnings release. Sales of high-end models increased, it said.</p>
<p>Canon also said it expects to sell 7.0 million compact cameras in 2015, versus a previous forecast of 7.8 million and 22.5 percent less than in 2014. It projects sales of cameras with interchangeable lenses to reach 5.8 million units rather than its previous view of 6.4 million.</p>
<p>The firm, which earns about 80 percent of revenue overseas and is a major beneficiary of a weaker yen, maintained its view of the Japanese currency trading at 120 versus the US dollar in the second to fourth quarters.</p>
<p>Shares of Canon closed 0.7 percent higher ahead of the earnings release, versus a 0.2 percent fall in the broader market.</p>
<p>Source: [<a href="http://gadgets.ndtv.com/cameras/news/canon-reports-29-percent-drop-in-q1-profit-as-compact-camera-sales-slump-686017" target="_blank">Reuters</a>]</p>

 

[Maximilian]

I hope that these drops on compact camera sales do not become life-threatening to photo industry.
But I am quite sure that they will lead to a consulidation in this market and to higher prices for the products left.
Also for the system cameras

 

[Hector1970]

You hear that Mr. Anderson?... That is the sound of inevitability... It is the sound of your death... Goodbye, Mr. Anderson... 8)

The day of the cheap compact is over.
The camera phone has taken over there.
I think the future market is in quality cameras superior to cameraphones.
A cameraphone will probably be alway limited by it's glass and it's need to be flush with the phone.

In the compact market Canon's future lies with small high quality compacts like the Sony RX100 III. Pocketable but with creative controls. In the DSLR it's in high quality full frame cameras with the glass to go with it.
Mirrorless will reduce their size and weight. They probably too will get into semi-affordable Medium Format.

Yes competition will reduce alot of competitors to the point of extinction.
Serious photography will remain popular however and will continue to require high-end equipment.

 

[bdunbar79]

I see a lot of Momtography going on at athletics events and it's great for them because they can immediately upload to Facebook.

 

[Maiaibing]

"It projects sales of cameras with interchangeable lenses to reach 5.8 million units rather than its previous view of 6.4 million."

Wow. That's. Just. Horrible...

2014 Canon DSLR sales were down 17% (after they also originally announced the ambition to have flat sales through 2013/2014).

2015 Canon again started the year predicting flat DSLR sales and already after 3 months write the number down 10% = years of double digit free fall in Canon DSLR sales.

We are closing in at around half of Canon's DSLR sales just a handful of years ago.

 

[neuroanatomist]

Market saturation and slow (or lack of) economic recovery. Nikon also revised estimstes downward. Not sure about other brands, but Canon and Nikon are most of the market.

 

[MikeT]

Seems to me that this would apply pressure on Canon to launch new DSLR products to generate revenue... and that they should have capacity to do so.

 

[Sunnystate]

Maybe it will finally sink in...
We, majority of consumers, unlike small group of people with excessive resources that constitute majority on this forum, don't need no friggin $30000 video cameras or $20000 lenses, we don't need crippled $2500 cameras so the $8000 cameras will keep selling, period! No magic here.
I am still keeping my Canon lenses, I am Canon man and I wish before Canon bleed to much money they at least try to do the right thing.
We want the best and most fun ride for the money! Simple as that, just like in the amusement park.
Company that got tons of money from us has obligations to spent it in to our enjoyment. We don't need another entity that is "handling us" and playing the market and customers to suck as much profit for minimum of investment.
Apple is recently buying small companies that will be used to implement innovation in the phone cameras to mimic DSLR ability... well here goes the Rebel market share LOL -That exactly same Rebel that Canon is trying to sell lately for over $1100 with kit lens.... well when they finally will lose that market segment maybe geniuses will try to offer a viable mirrorless option, and that will be the biggest irony and testimony to ridiculous politics ever.

 

[Takingshots]

Hopefully they got the hint that someone is eating more of the same pie. Either people are buying competitors' better IQ camera and extra features at a lower cost(price drops) or the use of the mobile phones are just as good as compact cameras. I think the same scenarios play out in the DSLR and FF cameras ... better IQ , smaller form factor, extra features, longer battery life, weather sealed, ..etc at affordable pricing. We shall see ...

 

[gsealy]

Hopefully they got the hint that someone is eating more of the same pie. Either people are buying competitors' better IQ camera and extra features at a lower cost(price drops) or the use of the mobile phones are just as good as compact cameras. I think the same scenarios play out in the DSLR and FF cameras ... better IQ , smaller form factor, extra features, longer battery life, weather sealed, ..etc at affordable pricing. We shall see ...

The thing is that most people just want to take a picture. They don't give too much of hoot regarding image quality as long as a picture is taken. The easiest, cheapest way to do that is with a phone camera. From there they can easily, within seconds, send a text with that picture, or put it on a social media site. I talk to adults at work or friends and they don't know much at all about photography other than pressing a button. We know the differences, but the general public does not, or care. If I mention that I spent $2K on a camera or a lens, then they look at me with a huge question mark. There is no sense in even trying to explain it.

 

[neuroanatomist]

Company that got tons of money from us has obligations to spent it in to our enjoyment.

I got a few odd looks from people because when I read this, I literally laughed out loud. Sorry, but that statement is simply ridiculous. The only obligation Canon has is to return value to their shareholders.

 

[dcm]

Maybe it will finally sink in...
We, majority of consumers, unlike small group of people with excessive resources that constitute majority on this forum, don't need no friggin $30000 video cameras or $20000 lenses, we don't need crippled $2500 cameras so the $8000 cameras will keep selling, period! No magic here.
I am still keeping my Canon lenses, I am Canon man and I wish before Canon bleed to much money they at least try to do the right thing.
We want the best and most fun ride for the money! Simple as that, just like in the amusement park.
Company that got tons of money from us has obligations to spent it in to our enjoyment. We don't need another entity that is "handling us" and playing the market and customers to suck as much profit for minimum of investment.
Apple is recently buying small companies that will be used to implement innovation in the phone cameras to mimic DSLR ability... well here goes the Rebel market share LOL -That exactly same Rebel that Canon is trying to sell lately for over $1100 with kit lens.... well when they finally will lose that market segment maybe geniuses will try to offer a viable mirrorless option, and that will be the biggest irony and testimony to ridiculous politics ever.

A company's direct obligation to customers is usually called a warranty. Smart companies will reinvest for the future if they want to be around for the long haul to both keep existing customers and attract new customers.

Many people are still focused on building everything into the phone. Apple's watch may give some indications of where they (and others) will go with cameras in the future as they "build out" their phones - not everything will be embedded. The phones will have wireless/nfc peripherals - watches, cameras, .... The watch is a good example of build out - it's pretty useless without the phone nearby. It doesn't do anything thephone cannot do other than biometic measurements (which can also be done by a non-watch device). The watch has a camera, but not much is known about it. I assume lower quality than the phone. And they have opened another revenue stream for the watch. Low end cameras may be a similar build out in the future - a device you carry separate from your phone to take higher quality pictures, but still works transparently in conjunction with the phone.

Even DSLRs seem to be headed that way, with WiFi/NFC communications to your phone/tablet becoming more common. Nobody does it that well, yet. The long term winners at looking at the whole picture, not just the cameras themselves as stand alone objects. It doesn't change overnight, but it is progressing.

 

[Sunnystate]

Hahahahaha! This really is ridiculous, how could I think that way! A happy customer means miserable shareholders of course.
I just go...

Company that got tons of money from us has obligations to spent it in to our enjoyment.

I got a few odd looks from people because when I read this, I literally laughed out loud. Sorry, but that statement is simply ridiculous. The only obligation Canon has is to return value to their shareholders.

 

[jarrodeu]

Company that got tons of money from us has obligations to spent it in to our enjoyment.

I got a few odd looks from people because when I read this, I literally laughed out loud. Sorry, but that statement is simply ridiculous. The only obligation Canon has is to return value to their shareholders.

I thought Sunnystate was trying to be funny. Looking at his response, I was wrong.
Jarrod

 

[mkabi]

EDITTED: Cause Dilbert posted it already.

At least someone is making money huh?
I wonder what they are doing right?

 

[neuroanatomist]

Market saturation and slow (or lack of) economic recovery. Nikon also revised estimstes downward. Not sure about other brands, but Canon and Nikon are most of the market.

Sony just had their best quarter in 7 years...

http://www.bloomberg.com/news/articles/2015-02-04/sony-narrows-annual-loss-forecast-on-image-sensors-playstation

http://www.sonyalpharumors.com/sony-announces-best-quarterly-profit-in-7-years/

LOL.

Since they've been hemorrhaging yen for the past few years, 'best' is a highly relative term. Also, the linked article credits their cell phone image sensors, not dSLR/MILCs.

 

[PhotographyFirst]

It's going to take some disruptive new sensor technology to really shake things up and get a new wave of upgraders blasting back into the market.

I got rid of my Canon 6D and L lenses for landscapes and now use a Rebel T1i and Sigma 8-16 instead. My landscapes have improved because I can carry much less weight and I no longer care about destroying my camera in dangerous shooting conditions. The thing is pretty much disposable compared to a $5000 FF camera setup. Image quality has been amazing for quite a few years now.

 

[old-pr-pix]

CIPA released their statistics for Mar 2015 today. The general trend is that shipments peak in Oct. or Nov. in anticipation of holiday sales, then drop in Jan. with a slow rebound in Feb. and Mar. This year that rebound has been moderated and shipments remain low. DSLR shipments still outnumber mirrorless by 3 to 1; however, that is significantly less than the 5 or 6 to 1 domination of the recent past.

Non-interchangeable lens (mostly P&S) shipments dropped 25% while interchangeable lens (DSLR + MILC)camera shipments were down ~9%. Clearly a difficult business to manage at the moment!

 

[Mt Spokane Photography]

Market saturation and slow (or lack of) economic recovery. Nikon also revised estimstes downward. Not sure about other brands, but Canon and Nikon are most of the market.

Sony just had their best quarter in 7 years...

http://www.bloomberg.com/news/articles/2015-02-04/sony-narrows-annual-loss-forecast-on-image-sensors-playstation

http://www.sonyalpharumors.com/sony-announces-best-quarterly-profit-in-7-years/

If their best quarter in 7 years still means losing a ton of money, its not too good.

While Canon is estimating a reduced profit, Sony is predicting a smaller loss. Sony is still losing money.

 

[Halfrack]

There is nothing in todays dSLRs that will get someone to upgrade. Folks who want a dSLR have one, maybe an old one, but they have one, know how to kind of use it, and get a result they are happy with. The 5 year old dSLR works, and folks don't need to spend the money.

Canon's biggest competitor is the 4 year old camera in the closet that comes out 5 times a year.