Canon U.S.A., Inc.

founded: 1965

Contact Information:

headquarters: 1 canon plz.
lake success, ny 11042-1198 phone: (516)328-5000 fax: (516)328-5069 toll free: (800)okc-anon url: http://www.usa.canon.com

OVERVIEW

Canon U.S.A., Inc. is a leader in professional and consumer imaging equipment. Some of its products include copiers, printers, micrographics, imaging filing systems, facsimile machines, word processors, typewriters, calculators, cameras and lenses, camcorders, and optical equipment among many others. Canon holds about 25 percent of the U.S. photocopier market. The company is renowned for its innovations, and is consistently one of the top 10 companies in terms of U.S. patents issued. With revenues of $1.9 billion in 1997, Canon continued to show solid sales growth throughout the 1990s. Canon employs more than 9,800 people at more than 30 facilities throughout North, Central, and South America and the Caribbean.

COMPANY FINANCES

Canon U.S.A., Inc.'s 1997 revenues increased 43.7 percent to 221,036 million yen ($1.9 billion) or 8.6 percent of net sales from fiscal 1996 earnings of $7.5 billion. This compares with 7.1 percent in 1995 and 5.7 percent in 1994. Canon's net income in 1996 was 94,177 yen ($812 million), a 71.1-percent increase over 1995, representing a 3.7-percent return on sales. Net income in 1995 and 1994 was 55,036 and 31,024 million yen, respectively.

In fiscal 1997 Canon reported record sales for the second consecutive year in both consolidated net sales and net earnings. The company's net sales increased by
7.9 percent to 2,761.0 billion yen ($21.2 billion), and net earnings increased by 26.2 percent to 118.8 billion yen ($914 million) over fiscal 1996. Net income per common and common equivalent share for fiscal 1996 was 106.96 yen ($0.92), and the annual dividends per share increased by 2.00 yen ($0.02) to reach 15.00 yen ($0.13) per share.

Canon's increase in revenue was the direct result of earnings incurred by its business machines; in particular, digital and color-copying machines. In fact, Canon's business machines accounted for 83 percent of the company's overall earnings. Cameras, on the other hand, accounted for 9 percent of overall net sales, representing strong demand for the Advanced Photo System-based cameras. Canon's optical and other products contributed 8 percent of overall earnings.

ANALYSTS' OPINIONS

In 1996 Canon's broadcast lenses earned Canon U.S.A. an Emmy Award, the highest honor in the U.S. television industry. In 1997 Canon's GP200F was named Multifunction Product of the Year in the annual office machine dealer survey conducted by Marketing Research Consultants, Inc. (MRC). In fact, dealers have recognized Canon for the past 12 years with an award by MRC.

Canon's ELPH camera was awarded a gold medal at the 1997 Industrial Design Excellence Awards (IDEA) design competition. First introduced in 1996, the ELPH camera has won many other awards and has been called "a timeless design destined to become a classic."

The 1998 Value Line Investment Survey reported that several Japanese companies will have a decrease in earnings due to the financial collapse in southeast Asia. In addition, it also stated that "foreign chipmakers have been hurt by low prices since 1996." However, Value Line predicts that increase in demand for the video disk technology will compensate for the other less-profitable business areas. Nevertheless, in their opinion, "These stocks are not timely in 1998 and investors should research them carefully."

HISTORY

In 1933 Takeshi Mitarai and Saburo Uchida formed "Seiki Kogaku Kenkyusho" (Precision Optical Research Laboratory) in Tokyo to build Japan's first 35mm camera. Two years later the camera was introduced under the brand name "Kwanon," after the Buddhist goddess of mercy; later they renamed the company "Canon." U.S. GIs stationed in Japan after World War II were avid customers for the cameras. In 1955 Canon established a small branch office in New York City, believing that the North American market could become a major part of their operations.

In 1964 Canon diversified into business equipment, introducing the first 10-key electronic calculator, and then in 1968 it developed a plain-paper photocopier, independent of Xerox's patented technology. However, Canon's advances in the business equipment field were not matched by innovations in its photography sector, and thus Canon was surpassed by Minolta and Pentax as Japan's leading camera exporters. Canon's managing director in the early 1970s, Ryuzaburo Kaku, turned the company around, promoting the electronic AE-1 in a media blitz that in 1976 included the first television commercials for a 35mm camera. By automating almost every feature, Canon made 35mm cameras accessible to even the clumsiest camera operator. Its success catapulted Canon past Minolta as the world's number-one camera maker.

FAST FACTS: About Canon U.S.A., Inc.

Ownership: Canon U.S.A., Inc. is a subsidiary of Canon, Inc., which is a publicly owned company traded on NASDAQ.

Ticker symbol: CANNY

Officers: Haruo Murase, Pres. & CEO; Seymour Liebman, Exec. VP, Finance & Administration; John Bollock, VP Human Resources

Employees: 9,800

Principal Subsidiary Companies: Canon U.S.A., Inc.'s many subsidiaries include: Astro Business Solutions Inc., Astro Office Products Inc., Canon Computer Systems Inc., Canon Information Systems Inc., Canon Research Center America, Canon Virginia Inc., SELEX Div., and Visual Communications System Div.

Chief Competitors: Canon competes for market share domestically and overseas. Some primary competitors include: Casio; Compaq; Dell; Eastman Kodak; Fuji Photo; Lam Research; Hewlett-Packard; Kodak; Minolta; NEC; Nikon; Seiko; Sharp; Siemens; Sony; Texas Instruments; Toshiba; Zerox; Olympus; Tokyo Electron; Varian; and Advantest.

In 1979 Canon produced the first copier to use a dry developer. Canon Virginia, Inc., Canon's primary production facility in the United States, was opened in Newport News, Virginia, in 1987. In 1992 Canon announced a joint venture with IBM to produce portable personal computers with built-in bubble-jet printers, and has since cooperated with IBM in other joint ventures. In 1996 the company established a research and development center for its bubble-jet printers and peripheral products in Costa Mesa, California.

STRATEGY

Canon's strategy of introducing cutting-edge technology in a myriad of products has served the company well. More than 10 percent of its annual head-office sales are funneled into the research and development of original technologies, and the company patents numerous innovations every year. Canon has also diversified its products as part of its strategy; for example, when the plain-paper copier market matured in the early 1980s, Canon shifted to manufacturing other automated office machines, including laser printers and fax machines.

Canon continues to produce innovations that make advanced cameras easy to use, and has introduced a cam-corder that lets users operate the focus and other functions by eye movement. One of Canon's newest technological breakthroughs and one that may be its entree into new markets is ferroelectric liquid display for flat-panel high-resolution display screens. Canon expects this product to replace cathode ray tubes in computer and TV screens as the industry standard. If Canon can position itself as a leading producer in this burgeoning market, the company can open a new sector of its production and marketing in TV screen production.

Canon also continues to introduce new standards for consumer electronics, including Elph, the world's smallest compact camera, and the first solar-powered camera. Canon plans to spend the balance of the decade focusing on multimedia technologies and clean-energy products such as solar cells. United Solar, an American joint venture between Energy Conversion Devices, Inc. and Canon Inc., developed a flexible solar shingle product—a thin-film solar cell in the form of a lightweight roofing shingle that employs proprietary thin-film photo-voltaics. The shingle can be incorporated aesthetically into the roof to provide electrical energy to the household by converting sunlight directly into electricity. The UNI-SOLAR shingle was judged the best innovation in the environment category by a panel of experts from Discover magazine and was awarded the magazine's 1997 Technology Innovation Award.

INFLUENCES

A healthy demand for personal computers has helped Canon's sales in Japan. The falling price of personal computers worldwide allows consumers to spend more on peripherals, such as printers and copiers. To avoid the effects of a slowing U.S. economy, stagnant growth in Europe, and weak consumer spending at home, Canon has cut costs by shifting production outside Japan and buying more parts overseas.

CHRONOLOGY: Key Dates for Canon U.S.A., Inc.

1933:

Takeshi Mitarai and Saburo Uchida form Seiki Kogaku Kenkyusho (Precision Optical Research Laboratory) to build Japan's first 35mm camera

1935:

They introduce the "Kwanon" camera named after the Buddhist goddess of mercy

1937:

Incorporates under the name Precision Optical Company

1941:

Precision Optical develops Japan's first indirect x-ray camera

1947:

The company is renamed Canon Camera Company Limited

1955:

The American subsidiary opens in New York

1964:

Introduces the world's first ten-key keypad electronic calculator

1968:

Introduces the world's first plain-paper copier to rival Xerox's xerography procedure

1976:

Canon develops a 35mm camera that uses a microprocessor to focus automatically and set exposure length

1982:

Introduces the world's first personal copier

1992:

Announces joint venture with IBM to create portable personal computers with built-in printers

1997:

Receives Discover magazine's Technology Innovation Award for its solar shingles

Canon's strategy for product introduction is to meet the needs of each geographic location. For example, the demand for digital technology exists in Japan, North America, and Europe. However, in southeast Asian nations the demand is for black-and-white analog machines. Therefore, Canon's products are developed and marketed accordingly. This strategy has proven successful for Canon.

CURRENT TRENDS

In 1988, a year after its 50th anniversary, Canon instituted a new corporate philosophy. According to the CEO, this is "the achievement of corporate growth and development, with the aim of contributing to global prosperity and the well-being of humankind . . . kyosei." The Japanese word kyosei means living and working together for the common good. However, some critics of Japanese mega-industries believe this concept is used as a justification for the formation of cartels.

Canon continues to introduce new products to remain competitive within the industry. For example, the company launched a new XL1 computer video camera, the Hybrid digital-video camcorder, and the $3.7-million I-line stepper, among other products. The company also formed a partnership with competitor Hewlett-Packard to build laser printers. An article in the Far Eastern Economic Review, referred to Canon as "one of a number of companies that have managed to perform well despite Japan's economic difficulties." However, the article also commented on the future growth of Canon: "The company will have to develop more extremely successful products if it is to continue growing at its current rate." Some analysts believe that Canon is not developing any such products at this time. On the contrary, the company continues to be committed to research and development. Canon believes it will succeed in the new market of digital networked systems and, therefore, continue its growth.

PRODUCTS

Canon manufactures many diverse products. Business machines are its best-sellers; these include bubble-jet printers, computers, electronic typewriters, fax machines, full-color copiers (Canon Color Laser Copier 800S), office copiers, personal copiers, and word processors. Computer peripherals include image scanners, printers, and laser-beam printers. The new printer pushes digital color laser output quality and reliability to new heights.

In its photography sector Canon continues to innovate, especially in the field of digital cameras. The Power Shot 350 is Canon's easy-to-use digital camera. The ES6000 Hi8 Camcorder allows the user to control the functions of the camcorder (focus, start/stop, fade in/out, etc.) simply by using eye movement. The EOS IX 35mm camera is Canon's top-of-the-line camera. The Canon ELPH has won many awards since its official introduction in February 1996, including a Gold Medal in the 1997 Industrial Design Excellence Awards design competition, sponsored by Business Week magazine and the Industrial Designers Society of America. Photographic Trade News named it "Camera of the Year" and Popular Science listed it among the "Best 100 Products of 1996." Good Housekeeping rated it a "good buy." The Canon ELPH 490Z is the world's smallest 4x power zoom camera. The Photo-Video Player IP-100 is designed for use with any Advanced Photo System-format film (also made by Canon). Using this player, photographs taken with Canon ELPH, ELPH 490Z, or EOS IX cameras can be viewed on a regular television. Canon also produces lenses for the movie industry and binoculars for personal use.

In its medical equipment division Canon's newest offerings are a high-speed film scanner for X-ray film filing and teleradiography, the world's first full auto-alignment tonometer (for ophthalmologic use), the CF-60UD fundus camera, the RK-3 auto refractor/keratometer, and the Communicator CC-7P and CC-7S (a compact communication aid for people with speech disorders). Canon manufactures optical drives and cards; the Read/Write drive RW50 is used in a range of applications, including health care, and to offer secure identification cards for travel and immigration. Canon has introduced its new silicon wafers (SOI wafers) called ELTRANTM (Epitaxial Layer TRANsfer). The new process of manufacturing its silicon chips has been patented by Canon.

CORPORATE CITIZENSHIP

In 1990 Canon introduced its "Clean Earth Campaign" with a toner recycling program, and it has since expanded the program to include work with major environmental organizations. In the United States, Canon has given major financial contributions to the National Park Foundation; has sponsored the National Wildlife Federation's "NatureLink" program, which provides nature visits inner-city families; and sponsors the widely acclaimed PBS television program "Nature." Canon also operates several public art-related programs, including ARTLAB, a laboratory that aims to create new artistic fields by applying digital technologies to artistic pursuits. ARTLAB consists of an office and a factory that are staffed full-time by Canon's computer engineers. The Canon Foundation provides funds for scientific research and grants to promote mutual understanding between European countries and Japan. The company also supports the United Nations Environmental Programme photo contest, an international event that heightens people's awareness environmental issues. At the local level it supports arts and sports programs in communities where their corporate subsidiaries and plants are located. Finally, the company participates in Yellowstone National Park's wildlife conservation program.

GLOBAL PRESENCE

Canon is truly a global corporation, with subsidiaries in Europe, South America, North America, the United Kingdom, and Asia, and with sales agents in most countries. Canon's expectations for growth hinge on other markets in the Asia/Pacific region. It plans to set up joint ventures in the Philippines, Vietnam, and India in response to growing demand for printers and copiers there. As the business-machine market matures in the United States and Europe, Canon continues to expand into other technologies, usually through joint ventures with small innovative companies. Industry trend spotters consider Canon's effort to move into "clean" technology to be a smart move, as the company offers more products for the growing environmentally conscious market.

EMPLOYMENT

Canon seeks employees on its web site. The company's message to potential employees is, "If you're motivated, upbeat and show real team spirit—and you're eager to explore our vision of the future—find out more about jobs we currently have available and the benefits they provide. Be sure to fill out our mini-resume!" The company offers complete benefits, including profit sharing and an annual bonus program. Because of its diversity and global presence, Canon is always seeking employees in its various business segments. The company posts available positions on its web site, along with a brief description of each.

SOURCES OF INFORMATION

Bibliography

canon annual report. tokyo, japan: canon, inc., 1997.

canon, inc. home page, 20 may 1998. available at http://www.canon.com.

"canon reports results for fiscal 1997." canon corporate public relations. new york, 1998.

canon, usa. home page, 27 july 1998. available at http://www.usa.canon.com/.

desmone, edward w. "can canon keep kicking?" fortune, 2 february 1998.

"friendly enemies: canon and hewlett-packard have a fruitful marriage building laser printers, even while they duke it out in other markets." fortune, 2 february 1998.

"foreign electronics/entertainment." the value line investment survey, 13 february 1998.

"hybrid digital-video camcorder." electronics now, january 1998.

landers, peter. "quality counts." far eastern economic review, 5 february 1998.

mcgrath, dylan. "$3.7m i-line stepper introduced by canon." electronic news (1991), 30 march 1998.

mitchell, keith. "not for the camera-shy." macworld, february 1998.

For an annual report:

write: canon u.s.a., inc., 1 canon plz., lake success, ny 11042-1198

For additional industry research:

investigate companies by their standard industrial classification codes, also known as sics. canon's primary sics are:

3577 computer peripheral equipment

5043 photographic equipment and supplies

5044 office equipment

5045 computer, peripherals, and software

5047 medical and hospital equipment

5048 ophthalmic goods