Nikon has released three worrying notices in quick succession, most notably a "Notice of Recognition of Extraordinary Loss" that announces losses totaling more than a quarter of a billion dollars over the last three quarters of 2016.
More than half of that comes from the "Result of Solicitation for Early Retirement," meaning buyouts for 1,143 employees, most aged 40 and older.
Announced but not to be: the Nikons that never were
This follows the unusual announcement that the company will not be producing the three Sony-cloney "DL" cameras that were announced about a year ago. They've been cancelled and won't be coming to market. Development of the three cameras had been troubled with technical problems, and apparently Nikon no longer thinks that particular direction will generate revenue, so it's cuttings its losses. The high-profile product cancellation underlines the other bad news.
Possibly most worrying is the document "Revision of the Financial Forecast for the Fiscal Year Ending March 31, 2017," which indicates worse performance in 2016 than the already pessimistic predictions.
In his article at DSLRBodies, Nikon gadfly Thom Hogan says "there’s no 'core philosophy' to what Nikon is doing. It’s all about cost management, for the most part. Yes, you have to manage costs, but that’s a lot easier to do if you produce the right products." Regarding the financial news, he notes that "there’s nothing in anything Nikon has announced that will tell us the pain is over," adding the prediction that "Nikon is about to become a smaller company. Possibly far smaller."
(Thanks to Kevin Purcell)
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Featured Comments from:
John Krumm: "People were wringing hands over Olympus just a couple years ago during their financial scandal, and further back when they canceled the Four-Thirds system and switched to Micro 4/3. Now I hear some people say that Nikon needs to be more like Olympus.
"My guess is they will work it out. As a Pentax owner, I worry more about Pentax!"
Jim: "This is sad news. One of the few lessons I have learned from a life in business is that you can't starve yourself to prosperity."
Mark Walker: "I sell cameras. Nikon have lost hugely in the market from where I sit. They haven't respected their customer base. There has been a shameful rapid succession of 'upgrades' as well as the virtual public beta testing of production models: I believe there are still contested class actions pending. Canon seem to be faring better, and my perception is that the pro market has made a substantial shift in their favour.
"I don't have any bias against Nikon, I've used enough of their products and have too much respect for what they have achieved. But, they seem to be like a lumbering dinosaur getting shredded by the mirrorless raptors and they haven't responded with any form of dynamism, swatting away with 'upgrades.' Maybe they will contract to the mid and high range, but, they will need to be nimble and unless 2017/18 sees something radical in the lineup that will actually sell, well...who knows? It is difficult to understand where they are going and that has to be worrying."
Eamon Hickey (partial comment): "Nikon is now forecasting a 9,000m yen (that's 'nine-thousand million yen') net loss for fiscal 2017, or about 81 million dollars on 750,000m yen (6.8 billion dollars) in sales. That's about a 1.2% net loss. Not good, for sure, but Nikon's very strong balance sheet can easily handle a small loss like that. Nikon has been nicely profitable for the past six years (in both cameras and, to a lesser extent, lithography equipment), thus the strong balance sheet.
"Nikon does have long-term challenges in a shrinking camera market, no doubt. And the whole DL fiasco is, well, a fiasco. Just terrible business performance. And not the only bad show from Nikon recently. But it's important to keep things in perspective. Nikon is financially strong; it is coming off many years of making lots and lots of money (unlike nearly all other camera companies besides Canon); and there is time to adjust."
Paulo Bizarro: "In my opinion, Nikon just joined the 1-inch sensor compact camera market too late. Sony started it, followed by Canon and Panasonic. How many more such compacts can the market sustain? Sure, the DL 18–50 seemed nice on paper, given the focal length range. But, again, too late. Better take the loss now, than a couple of years down the road. Similar story to the Nikon 1 MILC system: has the best AF in the segment (or had at the time), but not enough to make a dent in a market dominated by the big electronic companies (Panasonic, Sony). Fuji was able to make a difference by basically betting in a coherent MILC ecosystem, rather than spreading their resources. Nikon's prestige comes from SLR and DSLR systems, and they have some great recent products there (D5, D500, 105mm ƒ/1.4 lens). Venturing outside of the comfort zone seems risky for them, because they are being reactive, rather than proactive."