Paper Makers Industry Reports.doc

Stock Strategist Industry Reports Are Paper Makers on Santas Naughty List? Secular headwinds continue to eat away at paper volumes in North America. PrintCommentRecommend (0) By Thomas Mullarkey, CFA?| 12-24-10?| 06:00?AM?|?E-mail Article Could paper makers be on Santas naughty list this holiday season? Certain secular headwinds continue to eat away at select paper volumes in North America. And we believe that the growing preponderance of e-readers will continue to chip away at paper demand used in books, magazines, newsprint, and envelopes used in the developed countries of the world. Consequently, we are cautious on top-line growth prospects of forest-product companies that are overly dependent on publication paper or uncoated freesheet paper sales in the Western world. About the Author Thomas Mullarkey is an equity analyst at Morningstar. Contact Author | Meet other investing specialists E-Books Gobble Up Market Share2010 was certainly a blockbuster year for the ?Apple (AAPL Sponsored by: AAPL) iPad. During the quarter ending Sept. 25, 2010, Apple sold 4.2 million iPads, and millions more will certainly find their way under the Christmas tree this December. ?Amazon (AMZN Sponsored by: AMZN) and ?Barnes Noble (BKS Sponsored by: BKS) also rolled out improved e-readers in recent months. In fact, according to the Association of American Publishers, e-books have accounted for 8.7% of book sales thus far during 2010; up from just 3.3% during 2009 and roughly 1% during 2008 (see figure). We believe this growing demand for e-books will reduce the quantity of book paper consumed in the United States and Western Europe. Christmas Card Volume DownThe?U.S. Postal Service estimates that it will handle 15.8 billion cards, letters and packages during the holiday season. This will be down about 17% from the 19 billion items mailed during 2008. Mail is steadily being overtaken by various forms of electronic communications (email