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Fri, Oct 10, 2003 - Page 12 News List

Canon raises its digital camera sales forecast

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Canon Inc, the world's second-largest digital-camera maker, raised this year's digital camera shipment forecast for the second time this year as more professionals and photography enthusiasts were attracted to higher-featured models.

Canon plans to make more than 9 million digital cameras this year, 5.9 percent more than its most recent estimate, Tomonori Iwashita, deputy chief executive of image communication products operations, said on Wednesday.

As many as 1 million of all digital cameras sold this year will be more sophisticated single-lens-reflex models, Iwasahita said.

Surging sales of digital cameras, along with flat-panel televisions and DVD recorders, are buoying earnings at Japanese electronics makers.

Tokyo-based Canon and rival Sharp Corp both expect record profits in their respective business years. Canon is benefiting as camera users buy more digital models, because prices are falling and variety and image quality improving.

"Canon has a huge advantage over rivals with these high-end models, which should become mainstream products," said Hideaki Kurimoto, who helps manage the equivalent of US$2.5 billion in assets at Meiji Dresdner Asset Man-agement Co in Tokyo, including Canon shares. "You can expect Canon to maintain a strong position at the high end."

Tokyo-based Canon's shares rose 0.4 percent, or ?20 to 5,250 at the 3pm close of Tokyo Stock Exchange trading. The shares have risen 17 percent so far this year.

Digital-camera shipments by Japanese manufacturers were more than double those of traditional film models in the first eight months of the year, the Tokyo-based Camera and Imaging Products Association said last week.

EOS Kiss Digital, Canon's lowest price single-lens-reflex model, sold "way more than we originally expected," since it went on sale Sept. 20, Iwashita said.

EOS Kiss Digital is currently the lowest-priced digital single-lens-reflex, or SLR, model available in Japan and sells for less than ?120,000 (US$1,100) without a lens, and less than ?140,000 with one. Canon originally planned to produce 70,000 EOS Kiss Digital units monthly.

Canon expects total global digital SLR camera shipments to rise to between 800,000 units and 1 million units this year, and aims to achieve a 50 percent to 60 percent market share, Iwashita said. Digital SLR shipments were about 100,000 units in 2001, and about 250,000 units last year.

By 2006 when Canon expects its market share of digital SLR cameras to continue to total more than 50 percent while total industry shipments of digital SLR cameras may reach 5 million units, Iwashita said.

Canon last month already raised its annual forecast this year for its total annual digital camera shipments to 8.5 million from an original estimate of 8 million units.

The revisions mean Canon has been able to secure key components for making the cameras, said Mitsuhiro Osawa, an analyst at Mizuho Investors Securities Co.

"The next challenge for Canon is to secure a business model where they can make money from printer inks and other consumables before the pace of digital camera shipment growth slows in the next year or two," said Osawa, who rate Canon shares at "neutral plus."

Until recently, Canon manufactured higher-featured digital cameras in Oita Prefecture, while more basic models were made in Malaysia and China. EOS Kiss Digital is the first digital camera to be produced in Taiwan, as well as Oita.

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