As Coronavirus Spreads Markets Tank and Events Are Postponed


It is impossible to end this tumultuous week without doing one last post about the novel coronavirus (COVID-19) now rapidly spreading outside China to the rest of the world. On February 27, the World Health Organization (WHO) reported that there are now 82,294 confirmed cases globally, with 78,630 of them in China, and that the virus is now found in 46 countries outside China. As the news has worsened, financial markets around the world plunged this week. Headlines are blaring it is the worst week for stock markets since the 2008 financial crisis, which, of course, led to a global recession.

As the coronavirus spreads, concerns mount about the human impact, of course, but also about the economic impact. At Actionable Intelligence, our take is the virus likely spells bad news for printer OEMs and aftermarket supplies firms. So far, the only OEM reporting a financial impact is HP, which said the coronavirus will shave 8 cents off earnings per share in Q2 (see “HP Announces Q1 2020 Results and Stock Buyback and Value Creation Plan”). But the situation with the virus is fast-moving, and HP’s announcement came on February 24, which already seems like ages ago in a week filled with lots of bad news about COVID-19.

Earlier this week, we read an interesting report out of China that said sales of home printers and consumables in China increased significantly in February as a result of more workers and students working from home (see “Chinese Home Printer Sales Explode as Coronavirus Forces Remote Work”). There seem to be a growing number of events postponed and sites closed outside of China as well. In a couple of industry-specific examples, Konica Minolta closed its planetariums in Tokyo, explaining the move was in response to the spread of the novel coronavirus in Japan. CRN reports that HP has postponed until the fall its enormous Reinvent partner conference, which had been slated to take place in California in March, because of the coronavirus.

It is indeed possible that OEMs will see some uptick in sales of home printers and consumables as a result of the virus forcing people to stay at home—although sales of hardware will likely grow mainly in markets where device penetration is low. But we think the bigger story is a negative for OEMs: more workers staying home likely means less printing from higher-volume shared devices in offices. And if that weren’t a scary enough prospect for OEMs already struggling with slumping supplies revenues, here’s another. Should the coronavirus prove to be the event that leads to a global economic downturn, there will likely be job losses. Printing is closely tied to employment, and during the Global Recession of 2008 to 2009, printing fell off a cliff. The industry has never truly recovered.

Panic begets more panic. And we don’t want to be unnecessarily alarmist, but if the financial markets are any indication, all sorts of alarm bells were sounded this week. As Actionable Intelligence reported earlier this week, the financial condition of printer OEMs has already gone from bad to worse (see “The Big Picture: OEM Financials for the Quarter Ended in December 2019”). Based on the statistics reported so far, the coronavirus is not the type of extreme-high-fatality event depicted in novels like Station Eleven or movies like Contagion. But we cannot help but wonder if a coronavirus-driven economic downturn could prove fatal for some of the printers and supplies industry companies that were already struggling prior to the outbreak of the virus.

(Visited 156 times, 1 visits today)

Leave A Reply

error: Alert: Content is protected !!