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Discussion in 'Open Discussion' started by drd1135, Feb 12, 2013.
The Final Three Results | Sans Mirror â€” mirrorless, interchangeable lens cameras | Thom Hogan
IMHO, pretty much explains why we see tons of older bodies at Cameta for steal prices. It appears (on paper) that Panasonic has better production management than Olympus.
I remember it took months and months for my pre-ordered OM-D to finally arrive. I guess once they got production running smoothly, they forgot to turn it of on Friday.
It seems to me that in the last five years, the camera business has exploded but a lot of that is on credit. Now we're seeing the ripples of the credit crunch combined with the enthusiast market being somewhat saturated (how many of us have more than one interchangeable-lens digital camera?) and manufacturers keep making dozens of almost indistinguishable models. Also, camera phones are eating into point-n-shoot sales big time, which isn't helping.
It seems it was bound to happen. I hope they survive, and I hope I get some good deals while they bounce back from this.
Guess I should feel bad for only ever buying used gear ... first thought I had was '$500 OMD any day now - might even be new".
I imagine this is very similar to how the smartphone and tablet industry is affecting Dell, HP, and other PC makers.
Well I decided to look at the Olympus results and they do make interesting reading. Interesting? Why? Well you really have to doubt whether Olympus is going to be able to be in this business in a few years time.
(1) First we have the 9 months results - imaging division sales (yen) 87bn, 9bn losses. We also have a fully year forecast of sales (yen) 110bn and losses of 16bn. So Olympus is losing US$170m on sales of US$1.2bn. Its loss margin is close to 15% of sales that are continuing to shrink. It really is hard to see where it can find an additional 15% profit margin simply to breakeven assuming sales did stop declining. And sales have fallen (-18bn) and losses increased (+5bn) in a year when they have had the singular success of the EM5.
(2) Well we all know the camera business is bad but what is worrying is how badly Olympus's business id doing. 6 months ago at the 1Q results they were forecasting 149bn of sales and 1bn of profit for the division in the current year. So in just 6 months they have had to revise 'down' their sales forecast by 30% and of course the division is now hemorrhaging losses. Tom Hogan noted that there had been a build up in inventories - hardly surprising if 6 months ago when you were making production plans and expected sales to be 30% higher than they actually turn out.
(3) Now of course Olympus is a bigger company than just cameras so perhaps it can absorb these continuing losses. Well the medical division is healthy and will make 84bn of operating income but as well as the camera division losses it must support 30bn of corporate overhead. Without the losses from the camera division Olympus's profit would be 50% higher.
Finally consider that Olympus received a US$500m cash injection from Sony. The camera divisions losses are US$170m and US$170m higher than they were expected to be 6 months ago. They will burn through that cash pretty quickly selling cameras. And their net debt equity ratio is already 416% even after the Sony equity injection.
All in all, it wont be surprising if Olympus isnt in the business 5 years down the road.
Incidentally their slide presentation makes the following bullet points
* Reduce personnel by more than 10% from March 2012
* Cut SG&A expenses by 4bn yen on a YOY basis.
Further drastic reform is underway
Underlining by Olympus....
Does this news actually surprise anyone, given that most the World is either in recession, about to go back into recession or has just managed to scrape out of recession - or is teetering on the brink of a fiscal cliff. That's before we even mention the very real financial hardship of millions of ordinary consumers who are lucky enough still to be in work but are being squeezed to breaking point by punitive austerity measures imposed to help pay back the worldwide mountain of debt.
When faced with the choice of putting food on the table for our families or buying a new camera, what do most of us do? I'd love to do my bit to increase Olympus's sales and profits but that's out of the question for the forseeable future.
Unfortunately things will only get worse and the situation is not helped by politicians and economists across the globe failing to grasp the full severity of the problem. Here in the UK, for example, they are now forcasting a period of modest but sustained growth, avoiding a tripple dip recession. I can tell them that this will not happen unless there is a major change in economic policy; we will be back in recession within six months. Worse still, the severe austerity measures will continue to cause a vicious circle of declining revenue and ever rising debt for the Treasury. Five years down the line I doubt if many of us will care whether we have a camera or not, we'll all be facing a far worse fate.
The sad thing with Olympus is that: in the short term we benefit from great camera prices; in the long term they may be out of the camera business entirely. I hope I can get a lot of years out of the cameras that I own, I own too many good lenses to start over again in building a good kit. I also couldn't afford it - I'm less than ten years from retirement.
I would like to see a break out of the camera numbers between P&S, compacts, mirrorless, & DSLR's. I can't imagine the P&S market is looking good given phone cameras. I remain shocked at the shear number of P&S camera models out there.
This isn't really a complete explanation. Yes, times are not good in many places. But there are plenty of electronics-related companies making good money, and that includes several camera divisions.
Olympus unfortunately is not one of them, and unlike some of the others, their losses in cameras isn't a new thing - this has been going on for years.
Must be why Oly lenses come sans pouch and hoods ...
We all know Oly is in bad shape, but it is comforting knowing that should Oly go el fold-o, that Panasonic is there to pick up the pieces. Another plus for a shared platform.
But that latest report shows that even Nikon and Canon are struggling and certainly not meeting projected expectations. A large part of it must be that in difficult times people cut back on the luxuries first (and for most people cameras are a luxury). The economic problems have hit me hard and I know that many people are worse off than me, I'm actually very lucky. Regarding Olympus, it's true the camera division is a regular loss maker but they are now having more success in terms of products which are for once actually competetive with those of their rivals. In a healthy global economy it would be reasonable to expect that Olympus would be heading back towards profit by now.
Darn, I was hoping for really cheerful news .
But who will be there to pick up the pieces when Panasonic exit the camera market? If Olympus were to fold I'm not sure that Panasonic would inherit the Olympus market share, I think it would precipitate a catastrophic crisis of confidence in the :43: format
Let us know if you ever find any!
While this may be true I'm not really a fan of their bodies. I much prefer the Olympus, more retro range finder style as well as the menu/controls.
There's struggling and then there's struggling. It's fairly obvious the entire industry has medium and long-term issues. But there's a substantial difference between losing money consistently for the past 5 years, and a gradual slowdown of sales and buildup of inventory over the past couple quarters amidst continuing (and substantial) profits.
That's possible, but I don't see why it is relevant. The global economy is not healthy, and there is no indication that this will change any time soon.
Olympus Imaging's problems have long been blamed on compact sales, and I'm sure they are to blame to a degree, but the fact that even with substantially increased mirrorless sales, they are predicting much larger losses going forward suggests to me that something more fundamental isn't working.
Yes, a collapse of Olympus would be catastrophic and it may or may not rock the µ4/3 boat. It is comforting to know that with the collapse of Oly the value of my µ4/3 equipment won't be going down with the company. And equally, if not more importantly, the lenses will survive to shoot another day on better and improved bodies of future µ4/3 cameras.
This thread made me think of something - and that's that MILC market is arguably more crowded with manufacturers competing against each other than the DSLR market.
Note: Companies below are categorized by those that have introduced a new body within 365 days.
No wonder Canon and Nikon are hesistant to abandon DSLRs (where they are making profits) and jump into a brand saturated market.