Fuji Photo Q2 profit down, eyes more restructuring

[bmattock]

Fuji News Story Link - Click Here

By Nathan Layne

TOKYO, Oct 31 (Reuters) - Fuji Photo Film Co. <4901.T> reported a worse-than-expected 53 percent fall in quarterly profit on Monday, reflecting sluggish demand for photographic film and the absence of a big pension gain, but it kept its full-year outlook for now.

The company said it was considering steps to accelerate structural reform of its imaging solutions business, which handles photo film and colour paper, and restructuring charges for those moves could dent profits in the second half.

"Given the tough environment surrounding our imaging solutions business, we are considering further steps that would involve manufacturing, sales, distribution and development laboratory operations on a global scale," Chief Financial Officer Toshio Takahashi told a news conference.

Sliding demand for film and photographic paper has taken an even larger toll on rival Eastman Kodak <EK.N>, which posted a $1 billion loss for the quarter on hefty restructuring charges and a 20 percent drop in sales of film and other legacy products.

There is more if you follow the link, but here are some interesting bits...

The imaging solutions unit posted an operating loss of about 5 billion yen in the April-September first half, reflecting a 20 percent fall in colour film sales and a drop-off in demand for minilabs following a big order in the same quarter last year.

Just like Kodak, Fuji is getting hit in the wallet by continuing to produce film.

Fuji also cut its digital camera shipment forecast for the 2005/06 business year to 6.5 million units from 7.7 million and said it continued to lose money in its digital camera operations, although the losses have narrowed due to cost cuts.

Fuji Photo has struggled to boost profits on digital cameras, in large part because its line-up is heavy on compact models and it does not have a big presence in the high end of the market, where margins and price falls less severe.

"Market conditions are very harsh in the North American market. Price competition is intense," Takahashi said.

Fuji has a lot of point-n-shoot models, and that is where Kodak has elected to compete directly in the marketplace. In the DSLR market, Kodak has withdrawn and is still doing heavy R&D and making sensors and electronics for others.

Sorry the news is not good. Expect Fuji to spin off it's film-manufacturing companies soon, and then let them stand or fall on their own. Like Ilford, like Agfa. In Ilford's case, it appears to be working, in Agfa's case, not so much.

Best Regards,

Bill Mattocks

 

[Pherdinand]

Come On, Fuji, keep it Up!
Maybe - maybe - the agfa and kodak trouble will help fuji to gain some market.

Of course they have problems with the digicam sales. There's hardly anybody around me that does not have a digital P&S already. And many people seriously believe that a cell phone camera is good enough for their holiday and party snaps.

 

[bmattock]

Come On, Fuji, keep it Up!
Maybe - maybe - the agfa and kodak trouble will help fuji to gain some market.

Of course they have problems with the digicam sales. There's hardly anybody around me that does not have a digital P&S already. And many people seriously believe that a cell phone camera is good enough for their holiday and party snaps.

I agree that some film manufacturer will get a temporary bounce when the other major players exit the market. Sadly, I doubt it will be anything more than a stopgap in the general slide.

You could be right on the digicams - I'm not really in touch with that segment of the market. But the manufacturers are creating a feeding frenzy, that's for sure. Double the megapixels every six months or so. Yikes!

I don't know if the market is saturated yet, though. Leveling off, perhaps, as consumers wait for the next / cheaper digicams.

Best Regards,

Bill Mattocks

 

[Pherdinand]

Well, there's a large percentage of the Earth population that still cannot afford a digicam, or any camera for that matter. But things are changing in most places...

 

[peter_n]

As a big Neopan and Acros fan, I'm looking at the bright side. Yes profit was down by 53% but the key word is profit. Fuji Photo made a group operating profit of $248.9 million in the reported Jul-Sept quarter.

So while the margin is way down they are at least for the time being very much in the black in that particular division. They are not making that profit on film though, "Fuji Photo's earnings have been supported by solid demand for copiers and laser printers made by office equipment unit Fuji Xerox and strong sales of triacetyl cellulose film, a material used in hot-selling flat panel displays." We'll just have to wait and see if they spin film off, somehow I think they may not.

 

[zeos 386sx]

Just like Kodak, Fuji is getting hit in the wallet by continuing to produce film.

"But even as Kodak reported a US$1.03 billion loss for the third quarter, its new leadership -- largely recruited from digital heavyweights like Hewlett-Packard Co -- say the results show they're making real progress symbolized by one historic milestone: Sales of digital products now exceed revenue from film-based photography for the first time."

Fuji has a lot of point-n-shoot models, and that is where Kodak has elected to compete directly in the marketplace. In the DSLR market, Kodak has withdrawn and is still doing heavy R&D and making sensors and electronics for others.

"Patent-rich Kodak, they also point out, is No.1 in sales of digital cameras and digital X-ray systems in the US and photo kiosks, thermal home printers and online photo services worldwide."

The quotes are from: http://www.taipeitimes.com/News/worldbiz/archives/2005/10/24/2003277205

One research group says we hit max growth for digital last year. I expect we are at saturation for the low end market.

 

[bmattock]

One research group says we hit max growth for digital last year. I expect we are at saturation for the low end market.

I think it depends on how well the various camera manufacturers create dissatisfaction with 'last year's model' and a demand to 'upgrade' which of course actually means buy new.

More megapixels, longer optical zooms, bigger LCD's, smaller size, longer battery life, and interestingly, anti-shake technology built into low-cost digicams.

Last year, the bar was at 4 mp for a low-end digicam. This year, 7 mp?

If they can convince consumers that last year's model is no good, they can keep ramping up. Hard to say if it will work or not.

And in developing countries - the market is nowhere near saturation.

Best Regards,

Bill Mattocks

 

[ch1]

Fuji News Story Link - Click Here



There is more if you follow the link, but here are some interesting bits...



Just like Kodak, Fuji is getting hit in the wallet by continuing to produce film.



Fuji has a lot of point-n-shoot models, and that is where Kodak has elected to compete directly in the marketplace. In the DSLR market, Kodak has withdrawn and is still doing heavy R&D and making sensors and electronics for others.

Sorry the news is not good. Expect Fuji to spin off it's film-manufacturing companies soon, and then let them stand or fall on their own. Like Ilford, like Agfa. In Ilford's case, it appears to be working, in Agfa's case, not so much.

Best Regards,

Bill Mattocks

Bill,

Thank you for the quarterly update on what you consider to be the "demise" of film.

Does this mean you are now willing to give away all of your film cameras to me?

After all, if film is dead, why do you keep them?

Regards,
George

 

[bmattock]

Bill,
Thank you for the quarterly update on what you consider to be the "demise" of film.

You're welcome.

Does this mean you are now willing to give away all of your film cameras to me?

Why would you suppose that I *want* film to die? I don't, I assure you. I am a realist, though.

After all, if film is dead, why do you keep them?

I intend to keep them and use them as long as I can get film for them. I hope that I can still find B&W film for them, at least, until I am incapable of raising a rangefinder to my eye. If film ends before that, then I guess I'll have some nice displays and memories for my old age.

George, don't misunderstand me. I've said it before, I'll say it again. I love film. I like using it, I like he way it looks, I think it is better than digital at this point in time. I am not happy that it is going away so quickly.

I am also fond of the new digital photographic world coming. I like my DSLR and it is much faster for me to do some of my 'for profit' work with it than it is for film. But I continue to prefer film for personal use - more so with B&W.

Finally, I am fascinated with the changes coming. No technological revolution has hit this fast and this hard before - such sweeping changes, so fast. They'll talk about this in history classes someday, and we're witness to it. That doesn't mean I enjoy all of it happening to me, but I am still intrigued by the whole process.

Sad as it all is - I won't pretend it isn't happening. And I share it here because it is topical, it is of direct interest to us as photographers, and it doesn't make much sense to pretend it is not going on.

Best Regards,

Bill Mattocks

 

[John Robertson]

I think we will have to wait and see what the impact of 3MP+ phone- cams will be, friends in to the trade here reckon the impact on the compact digicam market could be severe!!
As could the effect on digital minilabs, what with people sending their pictures straight to theirs and others computers.

 

[bmattock]

I think we will have to wait and see what the impact of 3MP+ phone- cams will be, friends in to the trade here reckon the impact on the compact digicam market could be severe!!
As could the effect on digital minilabs, what with people sending their pictures straight to theirs and others computers.

I think that in general, 'convergence schemes' have not worked out. Not much of a market for a TV/VCR combo - yes you can buy 'em, but they're not big sellers. The PDA/Cell phone thing seems to have caught on to some limited extent, but not all that much. Most people who use a PDA and a cell phone still prefer to carry one of each. Again, the combined units still exist, but they are not really catching fire yet (if they ever do).

My gut reaction is that cell phone cameras, while fun, are not going to make it in the market. But I will freely admit that I might be very wrong with this one - if it catches fire, yes, it could be a category-killer.

As to the other, I think you mean WiFi-enabled cameras. Kodak stole a march on those, but I am not sure they're going to have much impact in the marketplace yet. We'll see, Kodak is definitely touting it as an advantage.

Best Regards,

Bill Mattocks

 

[zeos 386sx]

And in developing countries - the market is nowhere near saturation.

I think you made that point in another thread with reference to "technology skipping" in China. It's why I think Kodak made a good deal in China buying into a "film" company.

 

[bmattock]

I think you made that point in another thread with reference to "technology skipping" in China. It's why I think Kodak made a good deal in China buying into a "film" company.

I actually think of it as a mistake, exactly because of the technology skipping. I think the emerging middle class and consumer market in China is going to go straight to digital cameras, without purchasing film cameras. And they're over a billion people - it will take awhile to reach saturation.

I could be wrong - we'll have to see what film sales do in China.

Best Regards,

Bill Mattocks

 

[John Robertson]

<My gut reaction is that cell phone cameras, while fun, are not going to make it in the market. But I will freely admit that I might be very wrong with this one - if it catches fire, yes, it could be a category-killer.>

It might be different the other side of the pond, but here these things have really taken off with the 20 to 35 age group, (the ones with they money these days!)
They have them on contract, and they are updated regularly. The problem with the little digicams is that once bought, six months later they are worth nothing. The model I have was obsolete in six months, doing this I feel the manufacturers could shoot themselves in the foot. However at 60+ I 've got past the point of caring!!

 

[John Robertson]

Case in point - at the weekend I was at a large Hallowe'en party in a local pub. Only myself and one other had a digital camera, but there were literally dozens taking and swapping phone-cam shots, thats what struck me and the other camera user forcefully. Two years ago at the same bash, it was the other way around!!

 

[zeos 386sx]

I actually think of it as a mistake, exactly because of the technology skipping.

Kodak is the largest supplier of digital cameras in the U.S. When film sales start to evaporate in China who supplies the digital cameras to keep that Chinese company alive?

 

[bmattock]

It might be different the other side of the pond, but here these things have really taken off with the 20 to 35 age group, (the ones with they money these days!)

They have them on contract, and they are updated regularly. The problem with the little digicams is that once bought, six months later they are worth nothing. The model I have was obsolete in six months, doing this I feel the manufacturers could shoot themselves in the foot. However at 60+ I 've got past the point of caring!!

At 44, I'm out of the fashionista dance myself. A cell phone is nothing I want to have, only carry one because my employer insists. I haven't used mine in months, except for twice last week I called 911 for traffic accidents. Thirty-second calls, both of 'em, and that was literally it for over two months.

So you could well be right - I don't have the inside track on what the young turks care for these days.

I'm also somewhat familiar with the UK silly buggers game of 'happy slapping' which involves a cell phone camera, I understand.

Best Regards,

Bill Mattocks

 

[bmattock]

Kodak is the largest supplier of digital cameras in the U.S. When film sales start to evaporate in China who supplies the digital cameras to keep that Chinese company alive?

Oh, you clever little rascal! I didn't think of that! Well, then. Now I have some more pondering to do.

You may be aware that a huge glut of el cheapo junk digicams are moving up the channel right now - most of which are made in China, Taiwan, and Hong Kong (China). Check the importers boards - and see eBoy sales for the so-called '10 mp' digicams that are actually 3.2 mp interpolated up to 10 mp (badly, I might add). Could it be that Kodak wants to have an inside track to gut these upstarts before they get a good head of steam up? Oh my my my.

Best Regards,

Bill Mattocks

 

[bmattock]

Case in point - at the weekend I was at a large Hallowe'en party in a local pub. Only myself and one other had a digital camera, but there were literally dozens taking and swapping phone-cam shots, thats what struck me and the other camera user forcefully. Two years ago at the same bash, it was the other way around!!

Indeed, and I read about the recent terrorist bombings in London - and the news noticed how many readers sent in photos of the immediate aftermath, captured with phonecams.

Your points are excellent.

Best Regards,

Bill Mattocks

 

[zeos 386sx]

Could it be that Kodak wants to have an inside track to gut these upstarts before they get a good head of steam up? Oh my my my.

I would want an "inside track" in a market like China's.