Imaging Industry Financial Structure

Imaging Industry Financial Structure

Revenue and Operating Income Provides an Objective View

IN the 2006-2007 timeframe, Photizo Group consulted with various Wall Street hedge funds. After several sessions with these funds, it became apparent the questions that were being asked required more in-depth research. It was decided that Photizo needed a report on financial profitability and started gathering information on the printing and imaging manufacturer’s revenues and operating income. This was the genesis of this report. Photizo has taken the original financial numbers from 2007 and proceeded to add revenues and operating income from 2014. What was found will surprise the most ardent reader in the printing and imaging industry.

Let’s start with a 40,000-foot view of 2015. The worldwide market for hardcopy equipment and consumables softened in 2015 and have had at least six declining quarters in revenue. Most hardware original equipment manufacturers (OEMs) had to revise their financial projections downward at least once in 2015.

Japanese manufacturers have benefited from the weaker yen, but hat benefit is diminishing. The U.S.-based manufacturers continue to struggle. Hewlett-Packard, Inc. (HP) has emerged from a major reorganization and split into two companies. Lexmark announced that a consortium including Apex Technology would acquire the company and Xerox announce it was going to split into two companies, a Document Technology/Document Outsourcing company and a Business Process Outsourcing company that will be let by CEO Ashok Vemuri.

Declining revenues and this latest round of consolidation is, at a minimum, a sign of a mature market, and at worst, a sign of a secular downturn in the industry. This report steps back to examine the industry in its entirety and postulate on the evolution of this industry into its next phase.

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