# Canon Reports 29 Percent Drop in Q1 Profit as Compact Camera Sales Slump



## Canon Rumors Guy (Apr 27, 2015)

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Canon Inc on Monday said net profit fell 28.7 percent in its first quarter, falling short of analyst estimates, as the Japanese company faced slumping sales of digital compact cameras.</p>
<p>Profit was JPY 33.93 billion ($285.27 million) in January-March, compared with the JPY 53.64 billion average estimate of 5 analysts according to Thomson Reuters data.</p>
<p>The result comes as the world’s biggest camera maker seeks growth opportunities, in part to offset a drop in demand for compacts as consumers increasingly rely on smartphone cameras.</p>
<p>It plans to buy Swedish surveillance firm Axis AB for $2.7 billion – offering 340 crowns ($39.31) a share until the extended deadline of May 5 – and as of Friday owned 84 percent. It does not plan to up its offer even though hedge fund Elliott Management has since raised its ownership to 10 percent.</p>
<p><!--more--></p>
<p>“Sales volume for low-end (digital camera) models declined due to the ongoing contraction of the market in all regions from the previous year,” said Canon in its earnings release. Sales of high-end models increased, it said.</p>
<p>Canon also said it expects to sell 7.0 million compact cameras in 2015, versus a previous forecast of 7.8 million and 22.5 percent less than in 2014. It projects sales of cameras with interchangeable lenses to reach 5.8 million units rather than its previous view of 6.4 million.</p>
<p>The firm, which earns about 80 percent of revenue overseas and is a major beneficiary of a weaker yen, maintained its view of the Japanese currency trading at 120 versus the US dollar in the second to fourth quarters.</p>
<p>Shares of Canon closed 0.7 percent higher ahead of the earnings release, versus a 0.2 percent fall in the broader market.</p>
<p>Source: [<a href="http://gadgets.ndtv.com/cameras/news/canon-reports-29-percent-drop-in-q1-profit-as-compact-camera-sales-slump-686017" target="_blank">Reuters</a>]</p>
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## Maximilian (Apr 27, 2015)

I hope that these drops on compact camera sales do not become life-threatening to photo industry.
But I am quite sure that they will lead to a consulidation in this market and to higher prices  for the products left. 
Also for the system cameras


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## Hector1970 (Apr 27, 2015)

You hear that Mr. Anderson?... That is the sound of inevitability... It is the sound of your death... Goodbye, Mr. Anderson... 8)

The day of the cheap compact is over.
The camera phone has taken over there.
I think the future market is in quality cameras superior to cameraphones.
A cameraphone will probably be alway limited by it's glass and it's need to be flush with the phone.

In the compact market Canon's future lies with small high quality compacts like the Sony RX100 III. Pocketable but with creative controls. In the DSLR it's in high quality full frame cameras with the glass to go with it.
Mirrorless will reduce their size and weight. They probably too will get into semi-affordable Medium Format.

Yes competition will reduce alot of competitors to the point of extinction. 
Serious photography will remain popular however and will continue to require high-end equipment.


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## bdunbar79 (Apr 27, 2015)

I see a lot of Momtography going on at athletics events and it's great for them because they can immediately upload to Facebook.


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## Maiaibing (Apr 27, 2015)

"It projects sales of cameras with interchangeable lenses to reach 5.8 million units rather than its previous view of 6.4 million."

Wow. That's. Just. Horrible... 

2014 Canon DSLR sales were down 17% (after they also originally announced the ambition to have flat sales through 2013/2014).

2015 Canon again started the year predicting flat DSLR sales and already after 3 months write the number down 10% = years of double digit free fall in Canon DSLR sales.

We are closing in at around half of Canon's DSLR sales just a handful of years ago.


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## neuroanatomist (Apr 27, 2015)

Market saturation and slow (or lack of) economic recovery. Nikon also revised estimstes downward. Not sure about other brands, but Canon and Nikon are most of the market.


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## MikeT (Apr 27, 2015)

Seems to me that this would apply pressure on Canon to launch new DSLR products to generate revenue... and that they should have capacity to do so.


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## Sunnystate (Apr 27, 2015)

Maybe it will finally sink in...
We, majority of consumers, unlike small group of people with excessive resources that constitute majority on this forum, don't need no friggin $30000 video cameras or $20000 lenses, we don't need crippled $2500 cameras so the $8000 cameras will keep selling, period! No magic here. 
I am still keeping my Canon lenses, I am Canon man and I wish before Canon bleed to much money they at least try to do the right thing. 
We want the best and most fun ride for the money! Simple as that, just like in the amusement park. 
Company that got tons of money from us has obligations to spent it in to our enjoyment. We don't need another entity that is "handling us" and playing the market and customers to suck as much profit for minimum of investment.
Apple is recently buying small companies that will be used to implement innovation in the phone cameras to mimic DSLR ability... well here goes the Rebel market share LOL -That exactly same Rebel that Canon is trying to sell lately for over $1100 with kit lens.... well when they finally will lose that market segment maybe geniuses will try to offer a viable mirrorless option, and that will be the biggest irony and testimony to ridiculous politics ever.


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## Takingshots (Apr 27, 2015)

Hopefully they got the hint that someone is eating more of the same pie. Either people are buying competitors' better IQ camera and extra features at a lower cost(price drops) or the use of the mobile phones are just as good as compact cameras. I think the same scenarios play out in the DSLR and FF cameras ... better IQ , smaller form factor, extra features, longer battery life, weather sealed, ..etc at affordable pricing. We shall see ...


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## gsealy (Apr 27, 2015)

Takingshots said:


> Hopefully they got the hint that someone is eating more of the same pie. Either people are buying competitors' better IQ camera and extra features at a lower cost(price drops) or the use of the mobile phones are just as good as compact cameras. I think the same scenarios play out in the DSLR and FF cameras ... better IQ , smaller form factor, extra features, longer battery life, weather sealed, ..etc at affordable pricing. We shall see ...



The thing is that most people just want to take a picture. They don't give too much of hoot regarding image quality as long as a picture is taken. The easiest, cheapest way to do that is with a phone camera. From there they can easily, within seconds, send a text with that picture, or put it on a social media site. I talk to adults at work or friends and they don't know much at all about photography other than pressing a button. We know the differences, but the general public does not, or care. If I mention that I spent $2K on a camera or a lens, then they look at me with a huge question mark. There is no sense in even trying to explain it.


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## neuroanatomist (Apr 27, 2015)

Sunnystate said:


> Company that got tons of money from us has obligations to spent it in to our enjoyment.



I got a few odd looks from people because when I read this, I literally laughed out loud. Sorry, but that statement is simply ridiculous. The only obligation Canon has is to return value to their shareholders.


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## dcm (Apr 27, 2015)

Sunnystate said:


> Maybe it will finally sink in...
> We, majority of consumers, unlike small group of people with excessive resources that constitute majority on this forum, don't need no friggin $30000 video cameras or $20000 lenses, we don't need crippled $2500 cameras so the $8000 cameras will keep selling, period! No magic here.
> I am still keeping my Canon lenses, I am Canon man and I wish before Canon bleed to much money they at least try to do the right thing.
> We want the best and most fun ride for the money! Simple as that, just like in the amusement park.
> ...



A company's direct obligation to customers is usually called a warranty. Smart companies will reinvest for the future if they want to be around for the long haul to both keep existing customers and attract new customers.

Many people are still focused on building everything into the phone. Apple's watch may give some indications of where they (and others) will go with cameras in the future as they "build out" their phones - not everything will be embedded. The phones will have wireless/nfc peripherals - watches, cameras, .... The watch is a good example of build out - it's pretty useless without the phone nearby. It doesn't do anything thephone cannot do other than biometic measurements (which can also be done by a non-watch device). The watch has a camera, but not much is known about it. I assume lower quality than the phone. And they have opened another revenue stream for the watch. Low end cameras may be a similar build out in the future - a device you carry separate from your phone to take higher quality pictures, but still works transparently in conjunction with the phone. 

Even DSLRs seem to be headed that way, with WiFi/NFC communications to your phone/tablet becoming more common. Nobody does it that well, yet. The long term winners at looking at the whole picture, not just the cameras themselves as stand alone objects. It doesn't change overnight, but it is progressing.


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## Sunnystate (Apr 27, 2015)

Hahahahaha! This really is ridiculous, how could I think that way! A happy customer means miserable shareholders of course. 
I just go...



neuroanatomist said:


> Sunnystate said:
> 
> 
> > Company that got tons of money from us has obligations to spent it in to our enjoyment.
> ...


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## jarrodeu (Apr 27, 2015)

neuroanatomist said:


> Sunnystate said:
> 
> 
> > Company that got tons of money from us has obligations to spent it in to our enjoyment.
> ...


I thought Sunnystate was trying to be funny. Looking at his response, I was wrong.
Jarrod


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## mkabi (Apr 27, 2015)

EDITTED: Cause Dilbert posted it already.

At least someone is making money huh?
I wonder what they are doing right?


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## neuroanatomist (Apr 27, 2015)

dilbert said:


> neuroanatomist said:
> 
> 
> > Market saturation and slow (or lack of) economic recovery. Nikon also revised estimstes downward. Not sure about other brands, but Canon and Nikon are most of the market.
> ...



LOL. 

Since they've been hemorrhaging yen for the past few years, 'best' is a highly relative term. Also, the linked article credits their cell phone image sensors, not dSLR/MILCs.


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## PhotographyFirst (Apr 28, 2015)

It's going to take some disruptive new sensor technology to really shake things up and get a new wave of upgraders blasting back into the market. 

I got rid of my Canon 6D and L lenses for landscapes and now use a Rebel T1i and Sigma 8-16 instead. My landscapes have improved because I can carry much less weight and I no longer care about destroying my camera in dangerous shooting conditions. The thing is pretty much disposable compared to a $5000 FF camera setup.  Image quality has been amazing for quite a few years now.


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## old-pr-pix (Apr 28, 2015)

CIPA released their statistics for Mar 2015 today. The general trend is that shipments peak in Oct. or Nov. in anticipation of holiday sales, then drop in Jan. with a slow rebound in Feb. and Mar. This year that rebound has been moderated and shipments remain low. DSLR shipments still outnumber mirrorless by 3 to 1; however, that is significantly less than the 5 or 6 to 1 domination of the recent past. 

Non-interchangeable lens (mostly P&S) shipments dropped 25% while interchangeable lens (DSLR + MILC)camera shipments were down ~9%. Clearly a difficult business to manage at the moment!


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## Mt Spokane Photography (Apr 28, 2015)

dilbert said:


> neuroanatomist said:
> 
> 
> > Market saturation and slow (or lack of) economic recovery. Nikon also revised estimstes downward. Not sure about other brands, but Canon and Nikon are most of the market.
> ...



If their best quarter in 7 years still means losing a ton of money, its not too good.

While Canon is estimating a reduced profit, Sony is predicting a smaller loss. Sony is still losing money.


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## Halfrack (Apr 28, 2015)

There is nothing in todays dSLRs that will get someone to upgrade. Folks who want a dSLR have one, maybe an old one, but they have one, know how to kind of use it, and get a result they are happy with. The 5 year old dSLR works, and folks don't need to spend the money.

Canon's biggest competitor is the 4 year old camera in the closet that comes out 5 times a year.


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## dolina (Apr 28, 2015)

Photogs who frequent photo forums like CR will probably not substitute their dedicated still cameras for a smartphone or tablet.

As such we make up less than 1% of 1% of 1% of the overall worldwide camera market.

In the long term SLRs will become as relevant as range finders. For this reason Leica entered the medium format market.

In the long term mirrorless will eventually be used heavily by working photographers as SLRs are today.

In the long term point & shoots will survive by staying up market with better integration with smartphones.

Unless of course companies like Apple will again introduce another disruptive technology/product that'll further erode dedicated still cameras.

It took decades for 35mm full frame film rangefinder cameras to dislodge large format and medium format cameras in the early 20th century.

It took decades for film SLR cameras to dislodge range finders in the late 20th century.

It took about a decade for digital cameras to dislodge film cameras.

Fortunately for Canon they're a very diversified unlike Nikon.

I honestly would not be surprised if Sony will introduce a medium format version of their full frame point and shoot the RX1. Hopefully it will not cost more than $5,000.


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## ritholtz (Apr 28, 2015)

dilbert said:


> neuroanatomist said:
> 
> 
> > Market saturation and slow (or lack of) economic recovery. Nikon also revised estimstes downward. Not sure about other brands, but Canon and Nikon are most of the market.
> ...



According to that article Sony is making money on sensors which are used in smartphones. ;D ;D

"biggest contributor being its devices unit, which supplies the image sensors that power cameras built into its Xperia smartphones and Apple Inc.’s iPhones. Hirai is boosting investment in the chip unit to build more modules for phones, tablet computers and automobiles."


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## Mt Spokane Photography (Apr 28, 2015)

ritholtz said:


> dilbert said:
> 
> 
> > neuroanatomist said:
> ...



It also notes that the cameras portion of Sony is not doing so well. Sony does well on two things, sensors and finance (Loans). Movies turn a small profit. Cameras aren't losing money, and games are doing reasonably well.

TV sets and smart phones drag the entire company down to a net loss.


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## YuengLinger (Apr 28, 2015)

The economy in the USA is the worst it has been since the 1930's. Much of Europe is struggling. I understand that many Chinese have long viewed SLR's as extravagant and ostentatious. Cellphone snapshots are sufficient for people when money and time are tight, and there is so much cheap entertainment everywhere. Also, in the USA, education is so poor that few people know bad photography from good.

Good photography takes a lot of time. A lot.


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## sanj (Apr 28, 2015)

neuroanatomist said:


> Sunnystate said:
> 
> 
> > Company that got tons of money from us has obligations to spent it in to our enjoyment.
> ...



Sounds like short term thinking to me.


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## neuroanatomist (Apr 28, 2015)

sanj said:


> neuroanatomist said:
> 
> 
> > Sunnystate said:
> ...



You can view it however you like. In most jurisdictions (including the US and Japan) it's actually a _legal_ obligation for publicly held corporations.

If you think they're focused too much on the short term, I suggest that's because you're viewing their decisions from your narrow perspective as a consumer of their cameras and lenses (and from a consumer perspective, I share that view, but I also attempt to consider and understand the broader view of the business). 

Canon just spent nearly US$3B to acquire a video surveillance company, and is reportedly looking to spend another $3B on a medical device company acquisition. Each of those acquisitions (separately) represents more than Canon spends per year on internal R&D across the entire company. Those investments represent ~15% of Canon's market cap...strategic investments to drive long term revenue and thus deliver shareholder value. It seems pretty clear that they don't see consumer cameras/lenses as a long-term growth area.


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## AcutancePhotography (Apr 28, 2015)

YuengLinger said:


> The economy in the USA is the worst it has been since the 1930's. /quote]
> 
> I would like to see some citations supporting this. The economy has fluctuated a lot in the past years, but I seriously doubt that the US economy is the worst since the 1930s. But then how does one objectively measure how good or bad and economy is?
> 
> ...


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## YuengLinger (Apr 28, 2015)

In reply to AcutancePhotography:

Economy: Longest period of declining wages, lowest participation in job market and largest number of unemployed since the Great Depression, most people on food stamps, welfare, subsidized housing, "disability." Largest number of homeless per-capita.

Please tell me a decade since the 30's when you think the economy was worse. 

As for education, please check US student rankings. Please investigate how many MBA programs, and the GMAT itself, are now lowering standards for US applicants because foreign students are overwhelmingly outscoring.

US colleges and businesses recruit so many foreign-born students because the students who have been subjected to the US education system struggle to get through core curricula.

You, Acutance, used the "A word" (ART!) for photography, not me. While some photography is certainly artistic, even great art, I was thinking in terms of fulfilling a purpose. If somebody hopes for a pleasing photo of a child or spouse, but consistently takes photos that are unflattering in many ways, they have not done a good job, but they settle for what they got from their smartphone. There are lousy carpenters, auto-mechanics, chefs, landscapers...And photographers. Somebody who hangs a new door as a DIY project and feels proud, but doesn't notice or doesn't care that the door has to be lifted up forcefully to close all the way, has done a bad job.

People do bad jobs with photographs, but they don't care or they settle because they don't have the time or desire to improve. If you want to take a nice shot of somebody, but the subject's nose is unintentionally bulbous, or the skin-tone is cadaverous, or the eyes are nearly closed, or telephone poles are growing out of their head, or their strong jaw looks like it is disappearing into double chins...If the intention was to capture and share the beauty and charm but instead the subject looks ridiculous, that's a fail.

If more and more people are taking lousy photos, standards go down, and many snapshooters think their lousy photos don't look too much worse than the others on facebook.

So, with little discretionary income, a bleak economic prospect, little education of value, people don't aspire, of all things, to taking better pictures. And many hardworking people who do earn a decent income, but have little time because of career and family, simply cannot take the time to learn good photography. 

Marketing and a failure to understand the learning curve have made many people frustrated with their SLR cameras. Some who could afford them wondered why their pictures weren't suddenly amazing. 

That's why I ended my previous post with a reminder of how much time is involved in becoming a good photographer.

So Canon has the economy, smartphones, and education to deal with in learning how to make a profit in the current market with compact cameras that are a step up from smartphones, but still relatively inconvenient to carry around. And when it comes to SLR's, the economic factor is bigger, education is bigger, and then there is the "geek factor" to overcome. Even seasoned photographers sometimes feel self-conscious about carrying and using an SLR, so a socially awkward young person, or somebody who doesn't want to look like a nerd or "guy with camera" or whatever has a big hurdle to overcome.

I still remember how ridiculous I felt the first time I used a tripod in public. I used to think only pros and pathetic wannabes used them. Now it comes naturally, and I'm sure I look as ridiculous as ever. 8)

Finally (!), if a photographer believes there are no standards, no way to tell good from bad, then all the time spent learning the craft was a complete waste. Such a mindset reflects a state of despair or depression that I hope is temporary. :-\


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## SwnSng (Apr 28, 2015)

With VR right around the corner this could be a disruptive technology that could boost High Quality imaging back to being the priority with the masses. 

If you haven't seen it, try looking at 360 degree Panos using GearVR. Also, from what I heard Stereoscopic still images look great in VR.


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## dolina (Apr 28, 2015)

The US isnt the universe and it is rather saturated when it comes to dedicated still cameras.

The growth area is China and will outpace the US in under a decade in market size.

There are also other emerging markets like India that has as many people as China and they will all need the basics we all in CR take for granted.

The dedicated still camera market will survive unless a company like Apple offers a product that can do the same task as a SLR or mirrorless at a lesser cost or a greater over all convenience.

As for VR... I think it's well worth thinking that it should try to cost under $500 and you do not need to read the manual to use it.

Or else it'll be as popular as dedicated still cameras and not smartphones. Profitable but NOT as profitable.

Facebook bought into it so it has potential. Facebook potential...


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## YuengLinger (Apr 28, 2015)

Neither the US nor any other country is the center of the universe. The US has, however, historically been a wealthy consumer nation. That is changing quickly, with a lot of wealth that was here now being in the hands of the Chinese.

Japan will have to adapt to the consumer habits of China, and China will have to overcome lingering resentment towards the Japanese. As soon as SLR's become a major hit in China, a Chinese company will happily start churning them out. Maybe it is already happening.

India? Hope so.

But, Europe is sick and getting sicker, economically: http://www.telegraph.co.uk/finance/comment/jeremy-warner/11569329/Jeremy-Warner-Negative-interest-rates-put-world-on-course-for-biggest-mass-default-in-history.html

So, it isn't only Canon facing an uncertain future, but, as others have pointed out, they seem to be on a good track to diversifying.

My interest in the game? I think Canon SLR's are incredible photography machines, and the lens selection is stellar. The repair support is wonderful. I'd like to see them offering (or at least supporting!) eos/ef gear for decades to come. But with technology, few have the vision to predict even a year out.


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## dolina (Apr 28, 2015)

Per the Economist the #1 item bought by Chinese tourists in Japan are washlets.  Believe you me that's the #1 item I wanted to bring home from Japan.

Given the mainland Chinese propensity for status symbols (eg In HK's grey market the Leica M Typ 240 costs more than the Leica M-P Typ 240 even though the later costs $2,000+ more in the US because of the red dot) the SLR is a natural fit for the newly rich or middle class Chinese.

Europe either has an aging population or they're just plain overspending per person.

The most vulnerable company in CIPA's Nikon. I believe over 70% of their revenue is from dedicated still cameras?

http://nikonrumors.com/2015/02/07/nikon-had-another-bad-financial-quarter.aspx/


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## neuroanatomist (Apr 28, 2015)

dolina said:


> The most vulnerable company in CIPA's Nikon. I believe over 70% of their revenue is from dedicated still cameras?



Balderdash. They offer two card slots on many models and more low ISO DR. How can they fail??


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## kphoto99 (Apr 28, 2015)

neuroanatomist said:


> dolina said:
> 
> 
> > The most vulnerable company in CIPA's Nikon. I believe over 70% of their revenue is from dedicated still cameras?
> ...



Which camera system is likely to exist in the future:

The one from a company that generates the majority of income comes from cameras or
the one where the cameras are such a small part of profit that the management may decide that the distraction of making the DSLR is not worth it for the bottom line?

Desperation or apathy.


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## Mt Spokane Photography (Apr 29, 2015)

kphoto99 said:


> neuroanatomist said:
> 
> 
> > dolina said:
> ...



As in Sony or Panasonic or Samsung?


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## dolina (Apr 29, 2015)

If Canon fails to obsolete its own products someone else will. 

Apple obsoletes a whole product category and everyone and I mean everyone plays catch up.


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## neuroanatomist (Apr 30, 2015)

dilbert said:


> Sony's trend is up, Canon's trend is down.



True. Canon's downward trend means they posted only a ¥48B income. Sony's upward trend means they posted only a ¥128B *loss*. Wow, that's sure good news for Sony and bad news for Canon. I highly recommend you invest all your liquid assets in Sony stock, based on that incredible upward trend you mention.


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## AcutancePhotography (Apr 30, 2015)

neuroanatomist said:


> dilbert said:
> 
> 
> > Sony's trend is up, Canon's trend is down.
> ...



If the trend continues, it might be a good investment.  The problem is that people here are taking disparate pieces of data and trying to infer way too much.


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## neuroanatomist (Apr 30, 2015)

AcutancePhotography said:


> If the trend continues, it might be a good investment.



In what world does 'best quarterly profit in seven years' (as in, the most recent of the last 28 quarters) constitute a trend?? I think only in the twisted, divorced-from-reality world that lives in dilbert's head.


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## sanj (May 1, 2015)

neuroanatomist said:


> dilbert said:
> 
> 
> > Sony's trend is up, Canon's trend is down.
> ...


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