Laser Printer Makers Seeing Parts, Toner Shortages Due To Quake
Mar. 28 2011 -By ERIC SAVITZ
The laser printer sector is beginning to see some component and toner shortages as a result of the recent earthquake and tsunami in Japan, according to Barclays Capital analyst Ben Reitzes.
In a research note today, Reitzes notes that his Japan-based colleague Masahiro Nakanomyo contends that Canon and Fuji Xerox could be facing shortages of toner material starting next quarter. He notes that Canon makes all of Hewlett-Packard’s (HPQ) laser printer engines and toner, while Fuji Xerox makes most of Xerox’s (XRX) laser printer and copier engines. Given that new systems typically ship with toner supplies, he adds, production of copiers and printers could be affected in the second quarter, even for companies with production facilities located in China rather than Japan.
“While office equipment companies keep inventories of resin at toner plants and also have inventories of end-product toner cartridges, we believe makers of copiers and printers may consider curtailing production to avoid an interruption in toner cartridge supply,” he writes. “In addition to toner material, suppliers of some other components have been affected and office equipment companies have begun to search for alternative sources of supply. While these issues present short-term concerns for earnings and revenues, we believe that the situation will be sorted out over the next quarter or two and shouldn’t change a fundamental thesis. We also note that cash flow may not be materially impacted at HP or Xerox since owned inventories could fall near-term.”
Reitzes trimmed his EPS estimates for both HP and Xerox, although he contends the issues are likely to be short-term in nature. “While supply chain issues for toner materials bear monitoring, we believe sales will snap back eventually and any concern-driven dips could represent a buying opportunity,” he writes.
For HP, he trims FY Q2 EPS to $1.19, from $1.20, with revenue falling to $31.2 billion, from $31.5 billion. For FY Q3, he now sees $1.20 a share in profits, down from $1.23, with revenue of $30.9 billion, down from $31.6 billion.
For Xerox, his Q1 estimate falls to 21 cents from 22 cents, with revenues of $5.37 billion, down from $5.44 billion. For Q2, he goes to 24 cents a share, from 26 cents, on revenue of $5.52 billion, down from $5.67 billion. For Q3, his new target is 26 cents, down from 27 cents, with revenue of $5.55 billion, down from $5.6 billion.
http://blogs.forbes.com/ericsa...rtages-due-to-quake/
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