There has been some recent postings about Olympus. Specifically the rumour about the imminent closing of its camera division. The purpose of this article is to provide readers with some additional information on Olympus that they can consider.
November 22, 2019 Update: Olympus confirms commitment to Imaging Business
After some alarmist rumours about Olympus closing its camera business within “3 to 8 months” the company provided a very strong commitment to its Imaging Business. A detailed response to the rumours was provided to PhotoFocus. The entire PhotoFocus article can be read using this link.
Is it possible that Olympus will close its camera division? With the continued decline of the camera market there is a possibility that any one of a number of companies could close down their camera divisions at some point in time. For companies like Olympus, Canon, Sony, Fuji, Panasonic and others who’s core business isn’t cameras that possibility certainly exists. It would be a tougher decision for Nikon. Since the Olympus camera division is not profitable, there is speculation that the company will close it… one rumour stating within 3 to 8 months.
Rather than simply believe the rumours that are out on the internet, this article provides links to additional information on Olympus.
Olympus has responded to the rumour in a recent Sina Finance interview. Those of you that would like to read the entire follow up interview can use this link.
On November 6, 2019 Olympus issued a Notice of Formulation of Corporate Strategy. Readers wishing to read the entire 40 page document can use the link provided. This strategy document is focused on the core business of Olympus which is its medical business. Olympus has 70% market share of the gastrointestinal endoscopic equipment market with over 20,000 patents.
There is no significant mention of either the Scientific Solutions Business or the Imaging Business in this strategy document. Olympus has stated that strategy information on these two divisions will be forthcoming at the end of the company’s third quarter.
One of the questions that you can ask yourself is if it logical for Olympus to focus its strategy formation and implementation initially on its core business, then deal with its other business units a bit later on.
Additional information on Olympus you may want to read pertains to financial results. The second quarter 2020 financial results for Olympus can be obtained with the link. If you read the report you will see that Olympus posted a record high profit of 50.9 billion yen in the first half of the current fiscal year. You will also see that the Olympus camera division lost money, albeit at a reduced rate even in the face of declining revenues.
You may also want to have a look at the recent price of Olympus stock. It has increased dramatically over the past year. You can also look at the stock price history.
Here is a link to a Bloomberg interview about Olympus. This interview indicates the focus for potential M&A activity will be on the medical business. It also states that Olympus stock is being upgraded by analysts.
So, there is a lot of reference material that you can read that may help you form your own opinion.
You may want to ask yourself a few simple questions related to new product launches…
If you were the CEO of Olympus and you had decided to close the camera business in early 2020, would you have approved the launch of the OM-D E-M1X and OM-D E-M5 Mark III in 2019?
Would you have approved all of the tooling and manufacturing costs as well as recent sales and marketing costs associated with launching of those cameras in 2019 if you were going to close the camera business in 2020?
As the CEO, would you have approved the announcement of an Olympus PEN E-PL10 camera in late 2019, if you had decided that you were going to close the camera business in 2020?
Fundamentally, is it logical that Olympus would launch new products if it was planning on closing its camera division in the near term?
It is certainly possible that Olympus may stop making cameras at some point in the future. Just like it is also possible that Fuji, Panasonic, Canon, Nikon, Sony and other companies could also make that decision in the future as camera market volumes continue to erode.
So, you now have some additional information on Olympus. You can peruse this factual information, as well as ponder some simple questions. Hopefully that will help remove some emotion from recent rumours, and allow you to assess the situation logically. You can then come to your own conclusion on the veracity of the current rumour that the Olympus Imaging Business will be closing within the next few months.
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