John Bermingham, who recently became Smith Corona's president and CEO, is not ready to pronounce the long-ailing home office manufacturer as completely healed, but he is riding high on the company's first profitable quarter in two years and indicated Smith Corona is finally on the right road to recovery.
Part of the turnaround process will occur in October when Office Depot will begin selling a line of Smith Corona-brand office hardware. The exact products have not been disclosed, but the office superstore chain has licensed the Smith Corona name and is expected to roll out several hardware and supply products during the next 24 months.
Among the steps Bermingham has taken is to return the company to its original strategy of selling typewriter equipment, supplies and other products that place ink on paper. To that end Bermingham discontinued a line of telephone and fax products introduced more than a year ago before he joined the company and is launching a new line of ink cartridge replacement cartridges. Other plans for this year include expanding distribution into mass merchandisers, moving into the commercial sector, and expanding globally.
"Over the past seven months, since I came to this company, I have been rapidly getting us out of the telephone and fax machine business because there's no profit to be made," explained Bermingham. "Our core legacy of 114 years is the typewriter business, and while a lot of people seem to think the typewriter business is dead, it's still a very viable business, in a very slow decline, not rapid."
Bermingham estimated the worldwide typewriter market at $400 million to $500 million, with $200 million of that being sold in the U.S. "So if you look at the fact that there's still a lot of home use of typewriters and most businesses, from our research, still need one or several typewriters for forms, envelopes, 3 x 5 cards and certain labels, we believe that this is where Smith Corona's core focus should be for now."
Smith Corona is selling typewriters through the three national office superstore chains, he said, and "sales are already going up -- which they haven't done for some time -- and we're seeing a resurgence in our revenue stream."
This month the company will debut a 23-SKU line of inkjet replacement cartridges for Canon, Epson, Hewlett-Packard and Lexmark printers and is targeting additional products for release over the next 12 months. Other new products to be shown at CES will include telephone headsets.
Another area of interest for the company is to globalize its businesses, with "major efforts begun in Europe and Central and South America, and then sometime later this fall, expansion into Asia."
Smith Corona also plans to expand distribution in the U.S. this year to encompass mass merchandisers and will launch this month its first commercial business, selling telephone headsets, to be followed by a retail launch of the product around the January CES time frame.
Smith Corona posted a net income of $600,000 for its fiscal fourth quarter ending in June, compared to a $4.4 million loss for the same quarter last year.
"So we're coming back," Bermingham said. "We're not completely out of the woods yet. We still have a little more work to do. If you look at our trend over the last four quarters you'll see tremendous improvement. We're getting turned around, and we're poised to be a profitable company."