Ricoh To Buy IBM Digital Business Printer Op To Snag Top Spot

Taken from Nikkei Net Interactive:

TOKYO (Nikkei)--Major office equipment maker Ricoh Co. (7752) plans to acquire IBM Corp.'s digital business printer operation in April, a move that would catapult the Japanese firm to the top of the world market, The Nikkei learned Wednesday.

The acquisition -- Ricoh's largest ever at an estimated 700 million dollars, or about 85 billion yen -- is aimed at tapping growing corporate demand for printers that can receive data directly from computers and churn out large volumes of documents. The deal is likely to be financed mainly with Ricoh's own capital.

Ricoh is positioning digital printers as the next growth business after copiers and other office equipment. IBM, for its part, is accelerating its shift to a software and service provider in the information technology field.

Digital business printers are connected to companies' backbone systems to print various types of invoices, contracts, slips and other documents in high volume and at high speed. Manufacturers can derive a stable stream of revenue through the sale of toner cartridges and other consumables in addition to the printers themselves.

Ricoh will take over all global sales and maintenance service divisions of IBM's digital business printer business, with the employees likely to be transferred gradually. The staff in charge of developing the software that controls the printing process will also move to Ricoh.

Ricoh entered the digital business printer business through the 2004 acquisition of Hitachi Ltd.'s (6501) printer subsidiary, which has sales of approximately 60 billion yen. The global market for digital printers, including those sold to printing companies, is estimated at about 3 trillion yen and is expected to enjoy annual growth of roughly 10%.

Ricoh has grown its business around domestic sales of office copiers. Its ratio of overseas to total sales came to about 30% in the mid-1990s. To catch up with Canon Inc. (7751) and others, Ricoh has been snapping up office machine sales companies in the U.S. and Europe. In the year ending March 2007, overseas are expected to surpass domestic sales for the first time ever.

IBM has been on a spree to unload its hardware businesses, selling its hard-disk-drive operations to Hitachi in 2003 and its personal computer business to China's Lenovo Group Ltd. in 2005. In a strategic shift, IBM is concentrating resources on the software and service businesses, and the firm is expected to use the proceeds from the sale to fund acquisitions in the field.

(The Nikkei Thursday morning edition)