Large Format Review - Business News

Imaging and Printing Group (IPG) revenue increased 9% to $6.2 billion. Supplies revenue was up 5%, while Commercial hardware revenue and Consumer hardware revenue increased 28% and 4%, respectively. Printer unit shipments increased 16%, with Commercial printer hardware units up 44% and Consumer printer hardware units up 9%. Operating profit was $1.0 billion, or 16.9% of revenue, versus $960 million, or 17.0% of revenue, in the prior-year period.

 

HP today announced financial results for its third fiscal quarter ended July 31, 2010, with net revenue of $30.7 billion, up 11.4% from a year earlier including a favorable currency benefit of approximately one percentage point.

In the third quarter, GAAP diluted earnings per share (EPS) was $0.75, up from $0.69 in the prior-year period. Non-GAAP diluted EPS was $1.08, up from $0.92 in the prior-year period, including a one-time negative impact of approximately $0.02 per share related to a legal settlement. Non-GAAP financial information excludes after-tax costs of approximately $0.33 per share and $0.23 per share in the third quarter of fiscal 2010 and 2009, respectively, related primarily to the amortization of purchased intangibles, restructuring charges and acquisition-related charges.

"The broad-based strength of HP's Q3 performance further demonstrates the power of our strategy and the discipline of our execution," said Cathie Lesjak, HP chief financial officer and interim chief executive officer. "We raised our full-year outlook and are continuing to build momentum in driving out costs, investing for profitable growth and capitalizing on HP's competitive advantages in the marketplace."

Information about HP's use of non-GAAP financial information is provided under "Use of non-GAAP financial information" below. Unless otherwise noted, all growth rates included in the narrative below reflect year-over-year comparisons.

Third quarter revenue was up 12% in the Americas to $14.2 billion. Revenue was up 9% in Europe, the Middle East and Africa and up 14% in Asia Pacific to $10.9 billion and $5.6 billion, respectively. When adjusted for the effects of currency, revenue was up 11% in the Americas, up 12% in Europe, the Middle East and Africa and up 8% in Asia Pacific. Revenue from outside of the United States in the third quarter accounted for 63% of total HP revenue, with revenue in the BRIC countries (Brazil, Russia, India and China) increasing 21% while accounting for 11% of total HP revenue.

 

Services

Services revenue increased 1% to $8.6 billion. Infrastructure Technology Outsourcing revenue and Business Process Outsourcing each increased 1%, while revenue in Technology Services declined roughly 1%. Application Services revenue was up 4% versus the prior-year period. Operating profit was $1.4 billion, or 15.9% of revenue, up from $1.3 billion, or 15.3% of revenue, in the prior-year period.

 

Enterprise Storage and Servers

Enterprise Storage and Servers (ESS) reported total revenue of $4.4 billion, up 19%. Industry Standard Server revenue increased 31%, while Storage revenue increased 10% and Business Critical Systems revenue declined 15%. ESS blade revenue was up 29%. Operating profit was $549 million, or 12.3% of revenue, up from $381 million, or 10.2% of revenue, in the prior-year period.

 

HP Software

HP Software revenue increased 2% to $863 million. Business Technology Optimization revenue increased 3%, and Other Software revenue decreased 1%. Operating profit was $183 million, or 21.2% of revenue, up from $153 million, or 18.1% of revenue, in the prior-year period.

 

Personal Systems Group

Personal Systems Group (PSG) posted a 12% increase in unit shipments and maintained the leading market share position in PCs worldwide. PSG revenue increased 17% to $9.9 billion. Notebook revenue for the quarter was up 10%, while Desktop revenue increased 27%. Commercial client revenue was up 25%, while Consumer client revenue increased 12%. Operating profit was $469 million, or 4.7% of revenue, up from $387 million, or 4.6% of revenue, in the prior-year period.

 

Imaging and Printing Group

Imaging and Printing Group (IPG) revenue increased 9% to $6.2 billion. Supplies revenue was up 5%, while Commercial hardware revenue and Consumer hardware revenue increased 28% and 4%, respectively. Printer unit shipments increased 16%, with Commercial printer hardware units up 44% and Consumer printer hardware units up 9%. Operating profit was $1.0 billion, or 16.9% of revenue, versus $960 million, or 17.0% of revenue, in the prior-year period.

 

Corporate Investments

ProCurve revenue increased 42%, and HP Networking overall increased 198% year over year including the impact of the 3Com acquisition.

 

HP Financial Services

HP Financial Services (HPFS) revenue increased 14% to $764 million. Financing volume increased 3%, and net portfolio assets increased 13%. Operating margin was 9.4%, up from 7.9% in the prior-year period.

 

Asset management

HP generated $3.3 billion in cash flow from operations for the third quarter. Inventory ended the quarter at $7.2 billion, with days of inventory up to 28 from 25 in the prior-year period. Accounts receivable of $15.6 billion was down 2 days year over year. Accounts payable ended the quarter at $14.9 billion, up 2 days over the prior-year period. HP's dividend payment of $0.08 per share in the third quarter resulted in cash usage of $205 million. HP also utilized $2.6 billion of cash during the quarter to repurchase approximately 55 million shares of common stock in the open market. HP exited the quarter with $14.8 billion in gross cash.

 

Outlook

For the fourth quarter of fiscal 2010, HP estimates revenue of approximately $32.5 billion to $32.7 billion, GAAP diluted EPS in the range of $1.03 to $1.05, and non-GAAP diluted EPS in the range of $1.25 to $1.27. Fourth quarter fiscal 2010 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.22 per share, related primarily to the amortization of purchased intangibles, restructuring charges and acquisition-related charges.

For the full year, HP expects revenue in the range of $125.3 billion to $125.5 billion. HP expects FY10 GAAP diluted EPS to be in the range of $3.62 to $3.64 and non-GAAP diluted EPS in the range of $4.49 to $4.51. FY10 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.87 per share, related primarily to the amortization of purchased intangibles, restructuring charges and acquisition-related charges.

SGIA released the 2010 Market Trends Survey Report for the specialty imaging community, offering valuable information about markets served, business concerns and steps made by companies to increase their competitive advantage.

"The survey shows strong evidence that specialty imagers - garment decorators and graphics producers alike - are exploring new markets and opportunities as a way to bolster their businesses," said Dan Marx, SGIA's Vice President of Markets and Technologies. "Further, the survey shows how specialty imaging companies are using sales, management and production initiatives to strengthen their competitive advantage."

The full report, available to all SGIA members and survey participants, includes data such as:

• Technology distribution
• Primary markets served
• Top methods to attract new customers
• Sales and promotion expenditures

According to the US report, about 71 percent of imagers agree that referrals are a very effective way to attract new customers, while only about 3 percent rely on online directory listings for new business. To increase their competitive advantage in production, 37.6 percent of all imagers are adding finishing capabilities to their businesses - up from 29.1 percent in 2009.

The survey also concludes that retail (direct and indirect through ad agencies) continues to be the leading market for graphic imagers (75.7 percent). For garment decorators, educational institutions (77 percent) and corporate branding (72 percent) are among the primary markets served.

Océ, an international leader in digital document management and delivery, has promoted two executives to head up business units in the UK. Stephen Lynch has been appointed Océ UK Director of Document Printing and Craig Nethercott Océ UK Director of Production Printing.

Nethercott joined Océ in 2000. He progressed from various Account and Senior Account Manager roles in Document Printing, through to Sector Manager in Production Printing, before taking over as its Sales Director two years ago.

“The markets are improving. There’s renewed customer confidence and financial institutions are relaxing their previous stringent restrictions on lending money, which had stifled investment,” said Craig Nethercott. “Our market-leading print production and software systems, combined with service and after-sales support that is second to none, will put us in a strong position to benefit as the economy continues to recover. Colour is massively important going forward, and we are confident that our technologies, such as Océ ColorStream and Océ JetStream, will continue to increase our market-share.”

Lynch, who has been with the Océ organisation for more than 15 years, started as a Major Accounts Manager in 1995. Three years later he was promoted to  Northern Regional Manager, based Glasgow, covering Liverpool, Leeds, Manchester, Scotland and Northern Ireland, and then to National Sales Director in 2002. He was working for Imagistics when it became part of Océ in 2005.

“Whilst we operate in a very challenging environment, this also brings opportunities that we, as a major international player, are well positioned to grasp.” said Stephen Lynch. “In the current climate every organisation must ensure it is as efficient as it can be, and we are ideally placed to assess how they manage and produce documentation. Every organisation needs to maximise efficiencies. Océ’s Document Printing division is a specialist in MFDs and Managed Print Services, and our customer-focused business approach and state-of-the-art systems are helping us make real inroads into the marketplace.”

Bron Curley, Managing Director of Océ UK, said: “Stephen Lynch and Craig Nethercott have demonstrated real leadership throughout their careers at Océ. I have every confidence they will continue to build successful teams that remain market focused and provide services that add real value to our customers.”

Heavy rains in China beginning in May have triggered massive flooding and landslides across the country, causing widespread destruction and loss of life. In addition, on August 8, a devastating landslide struck Zhouqu county in northwest Gansu province and rescue and relief efforts remain ongoing.

We at Canon extend our heartfelt condolences to all those affected by these disasters and our thoughts go out to the victims and their families. Although the road to recovery will be challenging and take time, we hope that the region will soon be able to begin the rebuilding and healing process.

The Canon Group is aiding in the relief efforts for victims with a donation of RMB 2 million (approximately 25.4 million yen) to the Japanese Red Cross Society and other humanitarian aid organizations.

X-Rite, Incorporated today announced its financial results for the second quarter ended July 3, 2010.

 

Financial Highlights of today’s announcement:

- Second quarter net sales increased by 15.7 percent to $57.1 million compared to $49.4 million for the second quarter of fiscal 2009

- Second quarter Adjusted EBITDA increased $2.7 million, or 22.1 percent, to $14.9 million. Adjusted EBITDA was 26.1 percent of sales versus 24.8 percent of sales in the prior year second quarter

- Second quarter income from operations and net income improved by $5.7 million and $9.5 million to $8.2 million and $1.9 million, respectively, resulting in second quarter EPS of $0.02 per diluted share

- Strong year to date cash flow before financing of $18.6 million or 17.2 percent of sales

- Debt pay downs of $10.6 million for the quarter and $17 million to the end of the second quarter

 

Market Highlights of today’s announcement:

- Strong sales growth across all sectors and all regions

- New customer agreement signed with a leading North American Hardware Co-operative that is expected to increase iVue® market share and growth of the Retail sector.

- Introduced Pantone Matching Systems PLUS Series and the MA94 and MA96 Multi-Angle Spectrophotometer Industrial product lines

 

The Company’s strong sales growth was the result of recently launched product and marketing initiatives in combination with the global market recovery. Net earnings for the quarter were $1.9 million, or $0.02 per diluted share, compared to a net loss of $7.6 million, or $(0.10) per diluted share, for the same period of 2009.

 

Major new products introduced in the quarter were the new Pantone Matching Systems PLUS SERIES product lines and the MA94 and MA96 Multi-Angle Spectrophotometer. The new Pantone Matching Systems PLUS SERIES preserves all of the current colors of the Pantone Matching Systems, which it replaces, while adding a host of new colors, for greater design flexibility. The new Pantone Matching Systems PLUS SERIES product line incorporates X-Rite features such as the Color Checker Lighting Indicator, Color Checker Primer and Color Manager Software. The Multi-Angle products deliver cost effective reliable color measurement anywhere from the lab to the production line supporting formulation and quality control applications. The Company is receiving favorable customer acceptance of the new products.

 

The Company continued its organic product growth by announcing an agreement to install a minimum of 600 new color matching systems with a leading North American Hardware Co-operative over the next 12 months. This investment will replace an existing solution from an X-Rite competitor and supports the Co-Operative's paint department growth strategy.

 

"The positive momentum in our business this year continued into the second quarter with very solid growth in both sales and profitability," stated Thomas J. Vacchiano Jr., the Company's Chief Executive Officer. "This reflects the improving economic picture in many of our markets as well as success from our new sales, marketing, and product initiatives. One highlight here is the 26.1 percent growth of our Asia Pacific market. Furthering our commitment to the Asia Pacific region, the Company has recently announced Dr. Iris Mangelschots, a highly successful company sales and marketing leader, as President of X-Rite Asia Pacific region."

 

Through the Company's continued effective cost management and increased operating leverage, operating income for the second quarter increased to $8.2 million, or 14.4 percent of sales, in the period versus $2.5 million, or 5 percent of sales, in the prior year period. Supported by the combination of sales growth and the fiscal 2009 profit improvement actions, the Company reported Adjusted EBITDA for the second quarter of $14.9 million, or 26.1 percent of sales, an increase of $2.7 million or 22.1 percent over the second quarter of 2009.

 

The Company reported continued strong cash flows before financing activities of $18.6 million, or 17.2 percent of sales, for the six months ended July 3, 2010. Improved profitability and working capital metrics contributed to the Company's strong operating cash flows. As a result of the Company's operating cash flows an additional $10.6 million of first lien debt was paid in the quarter, for a total of $17.0 million in debt pay downs for the year. At quarter end net debt from secured credit facilities was reduced to $136.5 million.

 

Rajesh K. Shah, X-Rite's Chief Financial Officer, commented "I am pleased we are able to leverage the benefits of higher sales into significantly improved financial performance and cash flows. This has allowed the Company to continue to focus on accelerated debt pay downs while continuing to make the investments required to achieve our long-term growth plans. In addition to the $17.0 million in debt pay downs the Company achieved in the first six months I am also pleased to announce that we have already paid down an additional $9 million of first lien debt in the third quarter of 2010."

 

Vacchiano continued, "The Company is off to a good start this year. Our increased 2010 revenue and profitability reflect the strength and momentum of our product portfolio in a healthier global marketplace. This momentum should lead to double digit third quarter sales growth compared to the third quarter of last year. That said we continue to carefully monitor the economic climate, maintaining flexibility to manage our business opportunities accordingly."

ImTech announces new patent approval for thermally ejectable UV curable fluids

Years of development work led to the patent and resulted in ImTech providing three industry-leading, UV Curable inks for HP45 cartridges to the industrial printing market.

President and co-inventor, Bill Buskirk stated that "Our development was focused on a market opportunity: printing on non-porous substrates with thermal inkjet technology. Until recently, using thermal inkjet for many direct-part marking or package printing applications was not possible because inks were not available for these types of materials. Our products allow many of these applications to be addressed with the simplicity and low cost of thermal inkjet cartridges and printing technology."

Buskirk went on to state that "broadening the market addressable with thermal inkjet remains a top priority for our product development team.

“ImTech is releasing two new inks for HP45 cartridges demonstrating our capabilities with fast drying solvents for polyethylene and PVC based substrates," he added.

Specialty fluid development remains one of the core competencies of ImTech, a technology development and engineering company focused on the use and application of inkjet in the global industrial market.

ImTech provides specialty inks, printing systems and related consulting and engineering services for inkjet applications. Its products are available worldwide, ranging from piezo and thermal inkjet development and characterization tools to HP industrial coders, bulk systems and inks. As an OEM inkjet partner with HP’s Specialty Printing Systems Division, ImTech is licensed to fill new, original HP 45 cartridges with its own inks. The company’s ink solutions include UV-curable inks for use in TIJ products, as well as application-specific and custom inks.

ImTech’s engineers are recognized industry experts who were instrumental in developing thermal inkjet technology; collectively they have more than 250 years of inkjet and imaging experience and have more than 150 patent authorships. Recently, ImTech was named 40th on the 2010 Portland Business Journal’s fastest growing private businesses in Oregon list, marking ImTech’s third straight appearance.