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Tuesday, 08 November 2011


Yeeesh. And here I am, having just purchased a PEN a week ago. I guess even if Olympus eventually goes under, Panasonic will carry the m4/3s flag for a while...

Bad boyz, bad boyz,
wat'cha gonna do?
Wat'cha gonna do when they come for you?

It appears that they learned well from the masters of financial fraud...the U.S. of A. financial industry.

Damn. It IS like Ford, GM and Enron: a perfectly respectable company making a perfectly acceptable product brought down by the financial whiz-bangery of MBA/CEO idiots who thought they were geniuses.

Just another example of why the Wall Street way of making money is really just not good for business....

It's brilliant. Create a scandal so you can have an excuse to go bankrupt. Emerge as a new company without the burden of the tiny 4/3 format. An easy way to go full frame without worrying about existing users. Brilliant

Conspiracy enthusiasms aside, I very much doubt that's what they're up to.


At this rate it won't be long before Olympus's stock is so devalued the company may be bought by Kodak.

Of course I'm joking.


In the US, the executives would have walked away with millions.

@ Mark Roberts - What would call that new company, KO'd?

:-) Mike yes I doubt that also... Or do I ;-)

Who knows where the bottom might be for Olympus. Personally I don't think you can count on consumers electronics in the form of digital cameras as a reliable profit center in the current economic environment. Industrial imaging, electronics and other products are probably more predictable and stable for (re)building business.

I think the consumer camera business will likely be sold or otherwise liquidated. They certainly don't have much if any capital to put towards R&D or new product development.

As much as anything it is a huge PR nightmare. Olympus already is seen as a secondary player next to Canon and Nikon in most circles. It certainly is in terms of numbers. This holiday shopping season will be very telling for the camera division. I have bought Olympus in the past but not sure I would ever again.

In terms of selling the division? Who wants or even needs Olympus??

What a drag

What strikes me strangest is, the whole scheme seems to have been a way to disguise where the losses came from, (acquisitions instead of securities speculation), not to hide the amount of the losses. It's like it was entirely to save face.

I suspect I'm missing something, or that there's even more to come; but if not, Olympus' business should still be basically sound. Makes me wonder if there are Olympus ADRs traded in the US; might be worth a flyer.

TOP keeps me informed in so many ways. Would never have imagined it would help me to understand cooperate malfeasance. ;)

Hmm... now I wonder if Hoya is interested in another medical imaging products business?

Mark, Kodak has just sold its sensor division. Announced it yesterday.

My reaction to Olympus is... NOT Safe For Work!

I'm trying to find a positive outlook and really cannot.

The vultures and profiteers are going to flock around the medical division.

Possibly, just possibly, it might mean something that Olympus is comparatively strong in Europe.


If Apple was ever interested in acquiring some camera expertiece in order to develope an iOS-based camera device, the door appears to be wide open.

This saddens me. I always had a special regard for Olympus since I was introduced to photography with Olympus cameras.

I wonder if the company falls down even their digital cameras will become collectible items and I will finally have an excuse to buy a Oly e450 + zuiko 25/2.8 (always been tempted by this combo).

Besides the new links that you give above, I recommend viewing Kurosawa's The Bad Sleep Well and Juzo Itami's Taxing Woman. The first details business and political corruption (they are linked), the second the white-collar parts of the Yakuza. I hope that this unleashes a garrison of investigative reporters digging into what else has had to be covered up during Japan's terrible decade of flat economy, but that may be too much to hope for. Aren't all of the other second-tier Japanese camera companies (and maybe the first tier as well) also part of larger conglomerates?


It sounds like the losses are unlikely to be in the camera division, as the coverage indicates that they came from "securities investments." In other words, the board was playing around with the shareholders' money, and lost it.

There may be an upside: I suspect that a lightly used camera company will be for sale soon, and who knows? Maybe Thom Hogan wants to run one of those again. We can only hope.

Hmmm... Look to up left. "Olympus - a Ricoh company?"

I say crack open the T.O.P. war chest and make an offer. Or, better yet, lets start an "Occupy Olympus" where we march on the Tokyo HQ and not leave until we get the camera we want!

We can call it the "Canyonero".

The real question is: Does this mean I should buy the 45mm f/1.8 now before only overpriced second-hand ones are left or wait as they be cheaper if they start clearing stock in a closing down sale?

I agree whole heartily with Paul Luscher. When are the politicians of the world going to take back their countries from the money-baggers? I guess then they are no longer money-beggers. As a last check on financial reporting the auditors should have caught this. Unless of course they were payed off too. This is very dirty and I fear is only the tip of the iceberg for Japan and their intertwined mega-corporations.

Mark Roberts: Please don't do that, keyboards don't come that cheap...

It's time for Ricoh to start preparing adding yet _another_ mount to the ol' saddle...

Well, for a very long time I have been wondering how is it possible that they are still on the market. The 4/3 and m4/3 system have never been very popular. Yet, they did have money to create 4/3 and then m4/3 systems from scratch. I always thought that the camera division has simply been subsidized by other, more profitable divisions. Now I see that it could just be Yakuza's money-washing machine.

Dear Mike,

It'll be interesting to find out if this turns out to be true.

I mean, it's not often that a company would admit to accounting fraud as a cover story, but if the alternative is revealing criminal embezzlement and looting...

I am not entirely convinced that the rubenesque soprano has uttered her last hemisemidemiquaver.

pax / Ctein

In a perverse way, this makes me think that Olympus might be okay, and also explained to me why they were so pissed off at Woodford.

If the stories are correct, Olympus a long time ago made some really bad investments and took a huge loss -- this was back when the Japanese economy was collapsing after a real estate bubble, much as ours did three years ago. In an effort to avoid admitting a disastrous mistake (and taking the full hit then, which might have been the end of the company), they hid the loss, and then, using what otherwise would have been profits, they slowly over the years replaced the lost money -- it didn't go out too the Yakuza, it wasn't some huge transfer of money to the families of the board members.

It suggests that Olympus is capable of making quite a lot of money -- enough to replace those losses, and still show enough profit to keep the shareholders around. If Woodford hadn't blown the whistle, they might have pulled it off.

Now that it's out in the open, nobody knows what will happen.

By the way, I'm not defending Olympus, I'm just saying that for the first time, we might be starting to understand what happened, and why. It was all so mysterious.

They CAN'T go out of business, since I don't own any of their current products.
Minolta, Polaroid, Konica, Contax, Graflex, Rollei, on the other hand....

Morning Mike,
Well, I can remember reading a very long article some years ago, published by Harvard Business School, I think, of some research they did into why medium to large companies in the US fail. They were 'shocked' to find [ well they are a business 'skool' ] that the collapse was NOT caused by a poor product; nor by poor workers ripping the company off; not by the sales people working their collective butts off - but, horror of horrors, it was the top management, who through fraud or incompetence brought the company to its knees. So, where have we ALL heard of this happening before, why only just recently ? You reap what you sow. Many of the professors at HBS are now asking for a radical shake up of the world's capitalist financial system, feeling that it has reached it's 'use by date'. Interesting how extremes of finance always seem to fall over and take the rest of us with it. Oh, except for those at the top. Greed.
Adieu Mike B.


The behavior of the board and how they got to where they are now is a serious insult to the engineers and designers, as well as the folks actually making the cameras in Japan. Extraordinarily disappointing, it points at how important planning is for corporate succession when those who made the company what it is retire or die.

And for those who don't think it happens elsewhere, or who don't think it could happen to their company, think again: more companies have been brought down through incompetence and greed than by bad business conditions and market difficulties. Sadly, even the best of businesses are, at the end of the day, only human and hence frail and subject to failure.

I can only hope that the optical company survives and prospers despite this.

Olympus is a corporation that dominates (by 75%!) the market of optical diagnosis equipment, being #1 in endoscopy. The imaging division accounts for a mere 16% of their global sales. This scandal has nothing to do with 4/3 sensors. Olympus Imaging Corp. has been allowed to go on making marketing mistake after marketing mistake because its losses were barely reflected in global revenue, but now that Olympus Corporation is facing bankruptcy, it is possible that Olympus, the camera and lens brand, will disappear. Which is sad, as Olympus has such rich history of truly great products. I have an E-P1, which is a great camera (if often ridiculed by the Canikon posse) and I use it mainly with OM lenses, which must be among the best lenses ever made - especially the 50mm/f1.4. It saddens me to see Olympus going through all this. I hope there are radical changes at the board of directors, so that investors can regain their trust in the company, but this scenario seems implausible right now.

All they need now is a tawdry sexual element to the machinations and the story is complete.

Maybe,- just maybe, this might be a good thing.
Since the OM-1, I've been a fan. But increasingly, one had to question the decisions made by the camera group, especially the slow introduction of the E-5, then the apparent abandonment of four thirds products in favor of micro four thirds.
I hope someone competent steps in. For Kodak- it might not be a bad thing, as that company has learned its lessons.

I hope that's not true, Ned. I happen to like my E-3 very much.

No, I'll just stick with Occam's Razor: Plain old greed and stupidity...

I think this will be the end of the m43 and even the 4/3rds concept.
I can't see Panasonic carrying it on its own for too long. It'd be like the albatross.

I'm wondering if we're anyplace close to the ‘if there are any Olympus lenses you think you might ever want, you ought to order now’ point. Are there any whispers or speculations on this, or on the worst likely case for this?


I suspect that Ned should have added one of your "satire alerts" to his post. =)


This is all very interesting, especially being a former Arther Andersen employee that lost a job due to the Enron debacle. What is also interesting is the future of Olympus...I wonder how many camera execs are wheeling and dealing to pickup the future remains of an inevitable defunct Olympus brand.

I could be wrong, but a quick rundown of players without a current m4/3 product would be at the top of the list...Ricoh/Pentax would probably be a good fit - especially with their out of the box thinking. Or, wouldn't it be nice, albeit a longshot, if Kodak took their new found cash from patent sales and put it to good use by buying the Olympus camera division...talk about turn-key - they have no presence in any of the Olympus segments.

I just hope it isn't Sigma, I have no use for a $5,000 m4/3 camera, even if it has a mahogony grip.

"I am not entirely convinced that the rubenesque soprano has uttered her last hemisemidemiquaver."

Oh, definitely not. The investigators just convened. This was an attempt to get out in front of the worst revelations, or the worst ones that came to the fore first. Further "acts of the opera" to come, it seems virtually certain.


A potential silver gelatin lining in this darkroom cloud...

1. Ricoh sweeps in and buys the Olympus camera division for pennies on the dollar. Ricoh now owns both Pentax and Olympus.

2. Ricoh instructs Pentax to make a series of awesome pancake primes for M43.

3. Ricoh instructs Olympus to make K-mount versions of the tasty Zuiko zooms

From there on, Olympus can focus on M43 and smaller while Pentax can focus on APS-C and larger. The only fly in this soup is the GXR - where does it fit?

Yep. I agree with Ctein and Mike. They admitted to this type of major fraud very quickly and very easily compared to what is the norm for a Japanese company caught in a scandal of this magnitude. (Not that there has been one of this magnitude recently.) Tip of a huge iceberg at least, I'd think.

The best question was the one by a reporter who, in response to Takayama's claim that if Woodford hadn't exposed the fraud that it was still possible it would have come out, shouted, "Do you really believe that? You've been covering this up for 20 years." The defense of the remaining board is still that they were too incompetent to have been aware of the situation.

Still too early to check their stock this morning, but just before the interview yesterday at noon, it was already down to ¥745. This has affected both large and smaller companies in Japan that hold Olympus stock, and the scandal has hurt Olympus' main underwriter, Nomura Securities.

Has it made US TV news yet? You know, where they make it some sort of entertaining zen, bushido, face-saving mystery of the Orient thing, instead of the fraud that it is? When ABC news runs a story on it, then you know Olympus has really made the big times.

I have 4 of their Pen cameras and several lenses. In fact, I think I'll slap a roll of B&W in one right now, shed a tear, and go for a stroll. I thought Yoshihisa Maitani died too young but at least he didn't have to see this sad day. Still think I'm going to pick up a E-PL1, VF-2 and Pen F, OM and Leica M adapters. That should keep me fixed for digital for 5 years or so. It's strange, for many years it seemed Leica was on the brink but now they have apparently pulled themselves out of the pit. At least their problems weren't caused by dishonest business practice. There has always seemed to be a cadre of Olympus camera haters on the web and I suppose they are rubbing their hands in anticipation of Olympus demise. Never could figure out what their problem was. If you don't like a particular camera just don't buy it.

Gordon Gekko would be proud.

The Olympus m4/3 cameras are quite popular here in Japan AFAIK. You certainly see them around a lot. And the whole value of the camera division would be in that mount; the p&s market is insanely crowded and shrinking, eaten on the low end by phones and on the high end by 4/3 and other small-format, high quality cameras.

Most of the usual suspects already have their own small-format lineup. Canon does not, but they seem to always do stuff in-house, and haven't shown any interest in that segment anyhow. Ricoh have their hands full with the Pentax acquisition, and Hoya has shown they are not interested in the camera retail business.

So my guess is either that a phone maker - Sharp or Hitachi (for various reasons a Japanese company is most likely to pick up the camera pieces) for instance, or possibly HTC - takes it on as a high-end camera brand to complement their cellphone camera brand image and know-how.

Or, and this is a long shot, Cosina. Their bread and butter is optics, of course, but they've never been afraid of the low-volume camera market. And if they ever intend to take a step into digital imaging, this may be a very good opportunity. They'll get a separate, established brand to avoid diluting their own, and it's bound to be a bargain for the right kind of buyer (the kind that has the industry connections to be part of a managed break-up). If mr. K is ever going to add digital to his portfolio, this may be a golden opportunity.

Kodak sold their imaging sensor division?
That makes it official. Having sold their second kidney, Kodak is dead man walking. They'll be announcing their bankruptcy by the end of the year, I suspect.

This is certainly turning into a big bug under the carpet! This is somewhat reminiscent to another even bigger (or at least wider) bug under the Japanese carpet a generation ago. (No, I am NOT related to one of the big perps!)

When this story fist came out I suspected that Olympus will survive but with some intestines on floors. But I'm not entirely so confident now. The numbers are big but it's more troubling to see where the numbers are and what they represent.

Japanese business and political society actually invites such big periodic blow-ups, whether due to malfeasance or due to fault cover-up (nuclear plant exposure). Despite most large organizations having a ridiculous number of redundant staffers they're nearly all powerless and would be terrified to whistle-blow on superiors. In fact it might be a disgrace to do so. So every so often we get this huge messes that eventually spill over their normal containment, usually exposed by a non-Japanese.

Mark--buy the 45. 1.8. I'm sure you won't regret it even if Olympus floats down the river belly up.

This seems like a large scandal in the photo world,and maybe corporate Japan, but compared to our corporate scandals like the Enron fiasco it's rather small potatoes.

Too sad. When I began to use microscope I knew there was an Olympus, and I am still using them daily, though I don't have an Olympus camera.

Things could be worse. Imagine if a Japanese corporation was tasked with operating a nuclear power plant. Hang on a sec...

Oy vey.

Kenneth, the Japanese prime minister was a piker. :) What, 1.5 million dollars?

Our prime minister is being prosecuted under suspicions that he received around eleven million euros in bribes. Him personally, not "office".

As an MBA/CEO, I take GREAT exception to the comment:

"...brought down by the financial whiz-bangery of MBA/CEO idiots who thought they were geniuses"

the implication here is that all MBA/CEO's are idiots. So the next time there is a child porn case and someone says something stupid like

".... caused by PHOTOGRAPHERS out to make a buck..." you / we are going to let it ride?

I think people need to understand that there are idiots and crooks in all walks of life and all professions. Stereotyping doesn't help.

Apologies in advance, Mike.

This certainly more than a mole hill.

Does this now make Olympus home of the COGS?

Today (9 November) there's a lot of speculation in the media about a buyer for Olympus. One of the leading candidates is Hoya, who'd want it for the medical division (endoscopes, microscopes, etc.) That's the reason Hoya originally bought Pentax and if they follow the same pattern they'll buy Olympus and then sell everything but the medical division.

Whatever happens a split-up of Olympus to different buyers seems very possible.

Who were their auditors again, exactly? More than just the board should be in prison.

Sadly one cannot recover from this loss of confidence. The assets of the company will have to be sold to cover creditors as far as possible before it is wound up.

Medical products is an attractive purchase for anyone, but who would want the camera division? Panny may want to corner the MFT market, but actually they probably dont want to be the only player!

What a pity ! A camera and lens maker with a history of great cameras and optics,both in the film and digital era. The EP3 and the current Olympus micro 4/3 prime lenses, the 12mm and 45mm are truly beautiful pieces of work.

I really hope that someone steps up with an interest in continuing to produce the m4/3 system under the Olympus brand. Although I mostly use Panasonic gear, it's nice to work with a system that has more than one vendor.

Can anyone help me understand why Sony, Samsung, Nikon and Pentax *all* came up with their own mirrorless mounts instead of joining the m4/3s coalition?

It's getting worse for Olympus. Today (11/9) it looks like the Tokyo Stock Exchange (TSE) may delist Oly shares as early as next week. The TSE requires an accurate financial statement for the 3rd quarter to be filed by Monday. But that might be nearly impossible for Oly to accomplish.

Delisting would not necessarily mean death but some form of life support would certainly be required. My bet is that the Japanese government might quietly facilitate a temporary remedy, perhaps 3-6 months of grace, through some back-channel manipulation.

@Scott: Absolutely right. I'm an economist, and share some of the same problems that you do: not all of us were blinded by our profession's dogmas into thinking everything was going to be fine (quite the contrary: we were warning of an economic crisis in 2006!).

Sad, sad, sad. I use Olympus lenses and bodies, but also Panasonic. The Olympus bodies, in terms of real-world features, simply can't be beat, especially IBIS.

So initially it seemed the only possible explanations were fraud or incompetence. Now it seems it's fraud intended to cover up incompetence. Good-oh.

I think you nailed it, Murray.


.2 cents worth from one who works at a large Japanese company:

1. Is this the "tip of the iceberg" - I mean, Japanese corporate governance being so opaque, homogeneous and secretive in general, how do we know this is an isolated case and not a much more widespread phenomenon (witness the flight away from Japanese investments since Woodford first started singing to the FT...

2. Consider the longterm effects of this story on Japan's putative attempts to globalize and diversify its boards. I can tell you with certainty that Japanese companies are going to think twice before ever appointing a gaijin to such a high perch again - the "risks" are just too high. By the way, Olympus were certainly stupid to cheat like this for so long, but one might also say they were crazy to elevate Woodford, knowing who he was, to the top position.

3. The reluctance of the servile Japanese press to even touch this story for the first three weeks does not bode well for wide ranging governance reform here. I think they will circle around Olympus and stone them while staying clear of the hundreds of other known skeletons out there.


I know this comes quite late, but in case someone might still be interested: I posted with some recent hints on what happened.


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