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Photography Companies Provide Snapshot Of A Lousy Year
I'm willing to give almost any industry's stocks a break for its performance between October of 2007 (when the recession started) and March of 2009 (when the recession may have ended). All stocks pretty much stunk.
What I can't forgive, however, is losing more than 12% in April, while the S&P 500 gained more than 10%.
Which industry, pray tell, managed to completely miss the bullish tide? Photography. And, the performance disparity gets more painful the more time frames you look at. The S&P 1500 Photography Products Index was down 24% for the last two weeks (for cryin' out loud!), while the broad market is a little higher.
Can these stocks really be that bad? In a word, yes.
On the other hand, there may be one beneficiary behind the demise of the industry as we know it. Let's take a look.
It's All in the Numbers
If you're not concerned with things like revenue growth or positive net income (or a rising stock), then you may find something you like from this battered group. For the rest of us, it could be a struggle to find any glimmer of hope in the pile, now or in the future.
Let's start with the present, and the industry's big guns.
On Thursday, Canon (NYSE:CAJ) dropped a bomb on its investors, informing them of an 83% dip in Q1 earnings. Part of the blame was placed on a stronger Japanese yen (Canon is based inJapan
IN PICTURES: Break Into Forex In 12 Steps
I can cut the company some slack for exchange-rate woes; it happens. I can't cut them enough slack to justify an 83% dip in profits though, especially knowing U.S.-based Eastman Kodak (NYSE:EK) reported some dismal results of its own.
Kodak's net GAAP loss for its Q1 rolled in at $360 million - a big increase on the $114 million lost for the same period a year earlier. And if you think the non-GAAP loss would have been prettier, it wouldn't have. Excluding interest, taxes and a one-time restructuring charge, the company still lost $336 million in the first quarter of 2009, compared to an $81 million loss in 2008's first quarter.
Despite the growing losses, in a press release that followed the announcement Kodak's CEO said, "Despite the ongoing impact of the global recession, Kodak continues to bring to market innovative products that customers are embracing, and we are gaining or maintaining market share."
That may be basically true, but it doesn't quite seem consistent with Kodak's Q1 revenue, which fell 29%, from $2.1 billion to $1.5 billion. Customers may be "embracing" Kodak's products, but they don't seem to be paying for them. (Use key attributes to uncover top-level investments in Find Investment Quality In The Income Statement.)
Eastman-Kodak's representatives said an unfavorable change in exchange rates accounted for 6% of the 29% dip in revenue. I'd love to know where the exchange rates were beneficial to the corporation during Q1 - because it clearly wasn't in theUnited States Japan
Par for the Course
The farther down the list of these companies you go, the more it sinks in - there's just not enough money or profits in this business to go around. Most of these stocks are just carbon copies of Canon/Kodak. IKONICS (Nasdaq:IKNX) reported its troubling Q1 numbers a few days ago, posting a profit of 3 cents per share, down from five cents a year earlier. Sales were lower too, by 6%. X-Rite (Nasdaq:XRIT) is another example of the struggle. This colorimeter manufacturer is not only failing to turn a profit, but its losses are also widening.
Say Cheese!
So are photography dollars simply not being spent, or are they just going somewhere else? I'd say it's a little of the former, and a lot of the latter.
Shutterfly (Nasdaq:SFLY), the internet-based photo printing and sharing service, managed to raise its top line by 5% during the first quarter of 2009, to $36 million. Not that $36 million is comparable to Eastman-Kodak's revenues of just under $1.5 billion during its first quarter, but clearly the recession can't be the sole culprit for poor performance - Shutterfly's doing just fine dealing with the same consumers.
FUJIFILM Holdings (SMCAP:FUJI) will have reported its Q1 numbers by the time you read this. Maybe those figures will be a beacon of hope for the other players in the arena. I fear the worst though, even if FUJUFILM does reasonably well.
I seem to recall newspaper shareholders scoffing in the late '90s at the idea that the internet could overthrow the print media industry. However, now the prediction is playing out with vivid accuracy. Perhaps the web could disrupt the photography industry in the same way. In fact, I think it's already started. (Look at the big picture when choosing a company; what you see may really be a stage in its industry's growth. Learn more in The Stages Of Industry Growth.)
What I can't forgive, however, is losing more than 12% in April, while the S&P 500 gained more than 10%.
Which industry, pray tell, managed to completely miss the bullish tide? Photography. And, the performance disparity gets more painful the more time frames you look at. The S&P 1500 Photography Products Index was down 24% for the last two weeks (for cryin' out loud!), while the broad market is a little higher.
Can these stocks really be that bad? In a word, yes.
On the other hand, there may be one beneficiary behind the demise of the industry as we know it. Let's take a look.
It's All in the Numbers
If you're not concerned with things like revenue growth or positive net income (or a rising stock), then you may find something you like from this battered group. For the rest of us, it could be a struggle to find any glimmer of hope in the pile, now or in the future.
Let's start with the present, and the industry's big guns.
On Thursday, Canon (NYSE:CAJ) dropped a bomb on its investors, informing them of an 83% dip in Q1 earnings. Part of the blame was placed on a stronger Japanese yen (Canon is based in
IN PICTURES: Break Into Forex In 12 Steps
Kodak's net GAAP loss for its Q1 rolled in at $360 million - a big increase on the $114 million lost for the same period a year earlier. And if you think the non-GAAP loss would have been prettier, it wouldn't have. Excluding interest, taxes and a one-time restructuring charge, the company still lost $336 million in the first quarter of 2009, compared to an $81 million loss in 2008's first quarter.
Despite the growing losses, in a press release that followed the announcement Kodak's CEO said, "Despite the ongoing impact of the global recession, Kodak continues to bring to market innovative products that customers are embracing, and we are gaining or maintaining market share."
That may be basically true, but it doesn't quite seem consistent with Kodak's Q1 revenue, which fell 29%, from $2.1 billion to $1.5 billion. Customers may be "embracing" Kodak's products, but they don't seem to be paying for them. (Use key attributes to uncover top-level investments in Find Investment Quality In The Income Statement.)
Eastman-Kodak's representatives said an unfavorable change in exchange rates accounted for 6% of the 29% dip in revenue. I'd love to know where the exchange rates were beneficial to the corporation during Q1 - because it clearly wasn't in the
Par for the Course
The farther down the list of these companies you go, the more it sinks in - there's just not enough money or profits in this business to go around. Most of these stocks are just carbon copies of Canon/Kodak. IKONICS (Nasdaq:IKNX) reported its troubling Q1 numbers a few days ago, posting a profit of 3 cents per share, down from five cents a year earlier. Sales were lower too, by 6%. X-Rite (Nasdaq:XRIT) is another example of the struggle. This colorimeter manufacturer is not only failing to turn a profit, but its losses are also widening.
Say Cheese!
So are photography dollars simply not being spent, or are they just going somewhere else? I'd say it's a little of the former, and a lot of the latter.
Shutterfly (Nasdaq:SFLY), the internet-based photo printing and sharing service, managed to raise its top line by 5% during the first quarter of 2009, to $36 million. Not that $36 million is comparable to Eastman-Kodak's revenues of just under $1.5 billion during its first quarter, but clearly the recession can't be the sole culprit for poor performance - Shutterfly's doing just fine dealing with the same consumers.
FUJIFILM Holdings (SMCAP:FUJI) will have reported its Q1 numbers by the time you read this. Maybe those figures will be a beacon of hope for the other players in the arena. I fear the worst though, even if FUJUFILM does reasonably well.
I seem to recall newspaper shareholders scoffing in the late '90s at the idea that the internet could overthrow the print media industry. However, now the prediction is playing out with vivid accuracy. Perhaps the web could disrupt the photography industry in the same way. In fact, I think it's already started. (Look at the big picture when choosing a company; what you see may really be a stage in its industry's growth. Learn more in The Stages Of Industry Growth.)
by
James Brumley
James Brumley is a freelance writer and registered investment advisor. He began his career as a broker with a major Wall Street firm, where fundamentals and long-term holding periods were core strategies. After that, he switched gears completely, becoming an analyst at a short-term trading newsletter that focused on technical analysis. He now manages client money using the best of both philosophies. His company, Bluegrass Portfolio Management, offers investors an opportunity to reap superior returns with minimized risk.
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