Tuesday, August 18, 2009

RICOH Stock Could Rise 30% Over The Next Year

The Ricoh/Ikon/Infoprint odyssey continues...

NEW YORK, Aug 2 (Reuters) - Ricoh Co Ltd (7752.T) shares could be undervalued as investors overlook the benefits of two healthy acquisitions that could help the stock rise 30 percent over the next year, Barron's reported.

The Japanese company has transformed itself from an office-machine maker into a global technology solutions provider that gets most of its revenue from software and services like consulting.

Ricoh's acquisitions of a majority stake in IBM's American print systems unit, InfoPrint Solutions in 2007, and its acquisition of Ikon Office Solutions last August will help the company compete with rival Canon, said Barron's.

"The IBM purchase provides Ricoh with a solid foothold from which to launch further products in the high-volume document market," says Kunihiko Kanno, an analyst who follows Ricoh for Credit Suisse in Tokyo.

"Digital commercial printers are used to print big documents such as product manuals and direct mail quickly and in large volumes," he adds. "This is one of the fastest-growing segments of the office equipment market," he says.

Ricoh picked up "research and development, technology and skilled personnel from IBM that we could have never developed by ourselves," Kondo says. "This will be a profitable division once things pick up again." Because its clientele is mostly financial-services providers, InfoPrint hasn't turned a profit as yet. By 2012 analysts expect it could add ¥100 billion in revenue and kick in ¥2 to ¥3 per share in operating profits.

Ikon, which also hasn't delivered a profit to its new parent, holds even more promise. Ikon provides document- and business-processing services as an add-on to its conventional office-equipment lineup, Kondo says. The goal is to convert Canon customers to Ricoh products and introduce Ricoh clients to Ikon.

"We plan to assimilate their expertise, and turn Ikon's customer base of major global companies into our customer base," says Kondo. By 2012, analysts say Ikon should deliver ¥280 billion in revenues and ¥8 to¥9 yen per share in operating profit. Kondo says

Ikon will be an important driver of Ricoh's push into business and consulting services.

Article Here.

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