Tuesday, August 28, 2012

Lexmark announces restructuring, Cuts 1,700 jobs

LEXINGTON, Ky., Aug. 28, 2012 /PRNewswire/ -- Lexmark International, Inc. (NYSE: LXK) today announced restructuring actions, including the exiting of the development and manufacturing of the company's remaining inkjet hardware, which are expected to result in annualized savings of $95 million once fully implemented. Lexmark will continue to provide service, support and aftermarket supplies for its inkjet installed base.
Lexmark announces restructuring, Cuts 1,700 jobs"Today's announcement represents difficult decisions, which are necessary to drive improved profitability and significant savings," said Paul Rooke, Lexmark chairman and chief executive officer. "Our investments are focused on higher value imaging and software solutions, and we believe the synergies between imaging and the emerging software elements of our business will continue to drive growth across the organization.
"As we move forward, we remain confident in our strategy, competitiveness and ability to create value for shareholders," added Rooke.
Taking Actions to Improve Profitability
The restructuring actions announced today are expected to result in reductions primarily in inkjet-related infrastructure as well as positions in research and development, supply chain and other support functions.
The actions include closing the Cebu, Philippines, inkjet supplies manufacturing facility by the end of 2015. The actions also include eliminating inkjet development worldwide, including costs related to facilities, tooling, equipment, contract termination, and scrapping in process inventory, which are expected to be principally complete by the end of 2013.
These restructuring actions are expected to result in the elimination of approximately 1,700 positions worldwide, including 1,100 manufacturing positions.
The company is working with its strategic advisors to explore the sale of the company's inkjet-related technology.
These actions are expected to generate $85 million savings in 2013, increasing to ongoing annualized savings of $95 million beginning in 2015. Savings should be split approximately 65 percent to operating expense, and 35 percent to cost of goods sold. The company expects the majority of these savings to favorably impact pre-tax earnings.
The total program pre-tax cost for these actions is expected to be $160 million, with $110 million incurred in 2012, $30 million incurred in 2013, and the remaining $20 million incurred in 2014 and 2015. The total program cash flow impact for these actions is expected to be $75 million, with $40 million impacting 2012, $30 million impacting 2013, and the remaining $5 million impacting 2014 and 2015.
Maintaining Capital Allocation Discipline to Deliver Shareholder Value
Lexmark is continuing to execute on its previously announced capital allocation framework of returning more than 50 percent of free cash flow(1) to shareholders, on average, through dividends and share repurchases, while building and growing its solutions and software business through expansion and acquisitions.
Lexmark today announced that it plans an additional $100 million of share repurchases in the third and fourth quarter of 2012. With this action completed, Lexmark will have returned, through paid and declared dividends and share repurchases, more than $500 million to shareholders since mid-2011.
Lexmark's Board of Directors approved an additional $200 million of share repurchase authority. Total share repurchase authority remaining after the additional $100 million repurchases will be $251 million.
Conference Call Today
The company will be hosting a conference call with securities analysts today at 8:30 a.m. (EDT). A live broadcast and a complete replay of this call can be accessed from Lexmark's investor relations website at http://investor.lexmark.com. If you are unable to connect to the Internet, you can access the call via telephone at 888-693-3477 (outside the U.S. by calling 973-582-2710 ) using access code 24616118.
Lexmark's presentation and supplemental slides which provide additional information regarding today's announcements will be available on Lexmark's investor relations website prior to the live broadcast.
About Lexmark
Lexmark International, Inc. (NYSE: LXK) provides businesses of all sizes with a broad range of printing and imaging products, software, solutions and services that help customers to print less and save more. Perceptive Software, a Lexmark company, is a leading provider of process and content management software that helps organizations fuel greater operational efficiency. In 2011, Lexmark sold products in more than 170 countries and reported more than $4 billion in revenue.
To learn more about Lexmark, please visit www.lexmark.com. For more information on Perceptive Software, please visit www.perceptivesoftware.com.
For more information on Lexmark, see the Lexmark Facebook page and follow us on Twitter.
For more information about Perceptive Software, please visit the company's Facebook and Twitter profiles.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this release which are not historical facts are forward-looking and involve risks and uncertainties which may cause the company's actual results or performance to be materially different from the results or performance expressed or implied by the forward-looking statements. Factors that may impact such forward-looking statements include, but are not limited to, continued economic uncertainty related to volatility of the global economy, fluctuations in foreign currency exchange rates; inability to realize all of the anticipated benefits of the Company's acquisitions; reliance on international production facilities, manufacturing partners and certain key suppliers; inability to be successful in the Company's transition to a higher-usage, higher value product portfolio; possible changes in the size of expected restructuring costs, charges, and savings; failure to implement workforce reductions and execute planned cost reduction measures; market acceptance of new products and pricing programs; decreased supplies consumption; increased investment to support product development and marketing; the financial failure or loss of business with a key customer or reseller, including loss of retail shelf placements; periodic variations affecting revenue and profitability; excessive inventory for the Company and/or its reseller channel; failure to manage inventory levels or production capacity; credit risk associated with the Company's customers, channel partners, and investment portfolio; aggressive pricing from competitors and resellers; the inability to develop new products and enhance existing products to meet customer needs on a cost competitive basis; entrance into the market of additional competitors focused on imaging and software solutions, including enterprise content management and business process management solutions; inability to perform under managed print services contracts; increased competition in the aftermarket supplies business; changes in the Company's tax provisions or tax liabilities; fees on the Company's products or litigation costs required to protect the Company's rights; inability to obtain and protect the Company's intellectual property rights and defend against claims of infringement and/or anticompetitive conduct; the outcome of litigation or regulatory proceedings to which the Company may be a party; unforeseen cost impacts as a result of new legislation; the inability to attract, retain and motivate key employees; changes in a country's political or economic conditions; conflicts among sales channels; the failure of information technology systems; disruptions at important points of exit and entry and distribution centers; business disruptions; terrorist acts; acts of war or other political conflicts; or the outbreak of a communicable disease; and other risks described in the company's Securities and Exchange Commission filings. The company undertakes no obligation to update any forward-looking statement.
Lexmark and Lexmark with diamond design are trademarks of Lexmark International, Inc., registered in the U.S. and/or other countries. All other trademarks are the property of their respective owners.
(1) Free Cash Flow is defined as net cash flows provided by operating activities minus purchases of property, plant and equipment plus proceeds from sale of fixed assets.
SOURCE Lexmark International, Inc.
For further information: Investors: John Morgan, +1-859-232-5568 , jmorgan@lexmark.com, or Media: Jerry Grasso, +1-859-232-3546 , ggrasso@lexmark.com

Wednesday, August 22, 2012

Sharp Addresses the “For Sale” Sign Rumor

Posted on by Scott Cullen
I’ve been speaking to a number of dealers over the last couple of weeks and have been asked a number of questions regarding the financial stability of Sharp, as if I would know the answer to that question. Apparently, there’s been a lot of talk circulating, rumors mostly, about what’s going on with the company based on some bleak financial reports out of Japan. Last week when I interviewed Sharp’s Mike Marusic, senior vice president, Marketing & Business Solutions Group, for the article on what “Manufacturers Expect from their Dealers” I mentioned the questions I’d been asked and the gist of his response was to quote Mark Twain, “the rumor of my demise has been greatly exaggerated” and that any financial issues are related to what’s been happening with Sharp’s LCD business where television sales have taken a big hit in the current worldwide economy.

I wasn’t planning on following up that discussion with an article, but on Friday Mike e-mailed me along with various industry analysts and consultants a letter that Sharp President Doug Albregts sent to SIICA dealers outlining the facts after a news story hit the wires that Sharp was selling off its copier business.

In the e-mail Marusic explains that Sharp remains focused on its office technology and Sharp personnel are currently in Japan engaged in future product planning discussions. “Simply stated, we are focused on standard business activities for copiers,” states Marusic. “While this is not a pleasant period for the copier division to deal with these distractions, they are simply that, a distraction. Our launch of Polaris has been well received and we have met our July and August launch goals.”
He also points out that all articles related to Sharp and its financial issues have been about the LCD business where Sharp along with many other manufacturers has experienced challenges of late. “Previously, those articles touted the business equipment sector of Sharp as a profitable piece of the business that is a valuable to Sharp. Unfortunately, a two paragraph guess has caused a lot of concerns that are unfounded,” adds Marusic.

The following Business Week article shared by Marusic sums up the situation: http://www.businessweek.com/news/2012-08-17/sharp-denies-report-it-may-sell-some-of-its-businesses

Here is the content of the letter that went to SIICA (Sharp Imaging and Information Company of America) dealers that will hopefully quell a lot of those rumors.

Dear SIICA Dealers:
As many of you have recently read, Sharp Corporation is in the process of revitalizing our operations in order to be more competitive. While this process takes time, we are moving aggressively to position ourselves for future growth. However, during this period, there is often speculation about what we are going to do. While much of this has centered on other aspects of Sharp’s portfolio, a recent article appeared claiming Sharp was selling its copier business. I want to end any confusion or concerns you may have.
Let us be very clear:
  1. Nikkei has released an article based on their own judgment, and the article is speculation. Sharp Corporation has not released nor acknowledged this article.
  2. Sharp Corporation is under the process of revitalizing its business and is exploring all options to improve the financial condition of the company.
  3. Sharp is not currently negotiating the sale of the businesses, such as Copier and Air-Conditioner that Nikkei has reported in their article.
It is important for you to know that these are the words of our Executive Management in Japan, not simply the opinion of local management. As you can imagine, a public company such as Sharp must be careful not to mislead any investors so they are cautious with their statements. However, the third point is what is most important for all of us.

As pointed out in numerous articles in the past few weeks, Sharp’s document business is profitable and we are in the process of launching some of our most innovative products and services for our dealer community.

We cannot control the speculation of the press and we cannot control competitors trying to take advantage of the dealer community. However, the SIICA team will continue to provide you with our support and outstanding products.

And that’s where this story and the rumors end.

Tuesday, August 7, 2012

HP Sails Into Perfect Storm for Printers

It’s not hard to see evidence of that wider trend in the results of several companies in the printer and printer supplies business. In a research note out today, analyst Chris Whitmore of Deutsche Bank Securities looked at sales trends over the last 10 quarters at printer companies including Canon, Epson, Lexmark, Xerox and Hewlett-Packard and found that combined sales for equipment and supplies were down 6 percent year on year.

Additionally, sales of printing equipment during the last year have declined similarly, which is a bad sign for sales of supplies as they tend to lag sales of hardware by nine to 12 months and are more often than not the profit-making end of the business. Another indicator, sales of printer paper (specifically A3 and A4 paper) fell 6 percent in the second quarter to levels that are 20 percent below their historical peak in 2006.

Whitmore’s conclusion: The use of printed pages is on what appears to be a permanent decline that could only accelerate as tablets like the iPad and others like it get more popular. “Simply put, the content that was once printed for distribution or portability is now simply being distributed or shared electronically,” he writes.

All of the companies in Whitmore’s survey have already reported their earnings this quarter, except for one: Hewlett-Packard, and it reports its quarterly results on Aug. 22. When we last heard from HP, revenues in its imaging and printing group had decreased by nearly 9 percent, or more than $1 billion, for the six-month period ending April 30, down to $12.4 billion. Leading that decline was a 6 percent drop in sales of supplies, which may not seem important until you realize that sales of supplies have historically amounted to about $17 billion a year, or more than two-thirds of HP’s $25.7 billion revenue in the printer business.

It’s not the first time this trend has been so apparent: HP’s printer fortunes looked very stormy indeed ahead of another earnings report earlier this year.

This decline was at least one of the reasons that HP CEO Meg Whitman combined the company’s printer business unit with the personal computer unit under Executive Vice President Todd Bradley. Selling printers and PCs together, the thinking goes, creates an opportunity to save on costs that are otherwise duplicated.

But there may be other more fundamental changes coming to the way the printer business operates. In an interview with AllThingsD in June, Bradley hinted at such changes, especially around ink products, and indicated the company might reconsider cutting some money-losing printer models on the low end.

No one expects HP’s quarterly results to be particularly good. In fact, the consensus view of analysts surveyed by Thomson Financial calls for it to report overall sales that declined by about 3 percent year on year.

And the future doesn’t look any brighter, especially as the decline in printing extends into the workplace. Companies like Xerox and Lexmark have tried to minimize the damage by turning printing into part of a wider document and work-flow management service. But these services may fall victim to tightening corporate IT budgets. As Whitmore puts it: “From an enterprise standpoint, printing is increasingly a cost to be managed lower rather than area of spend or investment. Although many enterprise print vendors are competing via managed print services engagements, this trend speaks to the discretionary nature of spending on printing. As such, we suspect it will be the most vulnerable to future spending cuts.”

Wednesday, August 1, 2012

Ricoh Q1 2013 Highlights

Ricoh Company, Ltd. and Consolidated Subsidiaries

Financial Highlights for the First Quarter Ended June 30, 2012 (U.S. GAAP Financial Information)
1. Results for the Period from April 1, 2012 to June 30, 2012
(1) Operating Results (Millions of yen)
Three months ended
June 30, 2011
Three months ended
June 30, 2012
Net sales 467,393 459,387
(% change from the previous corresponding period) -3.2 -1.7
Operating income 11,326 14,281
(% change from the previous corresponding period) -48.2 26.1
Income before income taxes 9,287 12,275
(% change from the previous corresponding period) -40.1 32.2
Net income attributable to Ricoh Company, Ltd. 4,933 6,537
(% change from the previous corresponding period) -32.7 32.5
Net income attributable to Ricoh Company, Ltd. shareholders
per share-basic (yen)


Net income attributable to Ricoh Company, Ltd. shareholders
per share-diluted (yen)


i. Comprehensive income: ¥-23,251 million ( - %) (¥-661 million ( - %) in income in previous fiscal year)
(2) Financial Position (Millions of yen)
March 31, 2012 June 30, 2012
Total assets 2,289,358 2,243,118
Total equity 879,018 849,272
Ricoh Company, Ltd. shareholders' equity 822,704 792,438
Ricoh Company, Ltd. shareholders' equity ratio (%) 35.9 35.3

2. Dividend information
Year ended
March 31, 2012
Year ending
March 31, 2013
Cash dividends, applicable to the year (yen) 25.00 25.00
Interim (yen) 16.50 12.50
Year-end (yen) 8.50 12.50
Notes:Revision of expected dividends during this period: No

3. Forecast of Operating Results from April 1, 2012 to March 31, 2013 (Millions of yen)
Half year ending
September 30, 2012
Year ending
March 31, 2013
Net sales 940,000 1,920,000
Operating income 30,000 70,000
Income before income taxes 26,600 62,500
Net income attributable to Ricoh Company, Ltd. 13,500 33,000
Net income attributable to Ricoh Company, Ltd. shareholders
per share (yen)


Notes:Revision of forecast of consolidated operating results during this period: No

4. Others
(1) Changes in significant subsidiaries: No
(2) Adoption of concise quarterly accounting method or procedure: No
(3) Changes in accounting method: Yes
* See note (3) Changes in accounting method, changes in accounting estimate and reclassifications:, 4. Other in the attachment.
(4) Number of common stock outstanding (including treasury stock):
As of June 30, 2012 744,912,078 shares As of March 31, 2012 744,912,078 shares
(5) Number of treasury stock:
As of June 30, 2012 19,836,438 shares As of March 31, 2012 19,831,060 shares
(6) Average number of common stock:
Three months ended June 30, 2012 725,077,330 shares Three months ended June 30, 2011 725,502,674 shares