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Canon Inc. Message Board

  • keyboard_porridge keyboard_porridge Jul 31, 2005 10:17 PM Flag

    Growth, China, and S&P

    Canon has revenues of $30 billion a year. That's billion with a B. It's going to be hard for them to grow at a double digit rate. Nonetheless, they are a solid large cap company that makes good money. If you buy Canon for $50, you get a very good profit stream plus $8/share in cash. I am curious if their flat panel TV initiative will ever pay off. The stock price discounts it completely, so you have some upside there if it turns out to be a decent business.

    Don't worry about China. Take a step back and look at what China makes. They generally make cheap, low-tech, commodity-type products. They innovate very little and simply copy what others do, cutting all the corners they can.
    Many Chinese goods are pure crap. You get what you pay for when it comes to Chinese goods. Japan started this way, too, making shoddy goods, so maybe China will evolve also, but I bet it takes them a lot longer than it took Japan.

    And as for the S&P and other analysts "price targets", you should now realize these guys are jokers pulling numbers out of thin air. $80 target one day, $50 dollar target the next, does it get any more pathetic than that? I would say I'd give you two cents for the S&P, or any, analyst's opinion, but two cents would be splurging. The S&P report is good to see what a company's numbers have been like for the last few years, so you can make up your own mind on their general direction and stability, etc. The investment opinion that comes in those reports isn't worth the paper it's printed on.

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    • I agree.

      but I think China will eventually do what Japan and South Korea has done....

      from low cost cheap products to high quality, brand names goods.

      • 1 Reply to another_planet2001
      • <<but I think China will eventually do what Japan and South Korea has done....

        from low cost cheap products to high quality, brand names goods>>

        I disagree. China is culturally quite different from Japan. In Japan, quality is a cultural imperative. The Japanese do high quality work because they would be ashamed not to. Yes, they produced junk for a while after the war, but that was a very deliberate strategy. Remember, the whole country was flat in 1946. The plan was first to build fast, then to build well, and that is exactly what they have done.

        China is much more like the US. They are a huge and culturally diverse country without a single motivating ideology. Some Chinese strive for quality, others are "kick ball, collect check" types, and several decades of cummunism have brought the latter to the forefront. In a way this will make China a more challenging competitor for the US. They will challenge US businesses where we have always done best - at the intersection of quality and quantity. However, it will be a long time before they can go head-to-head with a company like Canon. And, why should they? It will be much easier to grab market share from weaker competitors, and there are plenty of those out there.

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