Required Reading...

...For those following the Olympus mess. A lucid explanation of the core issues as they are now understood, having gradually emerged over the past several weeks. "Corporate Japan Rocked by Scandal at Olympus," by Hiroko Tabuchi, from The World's Best Photography Magazine this morning.

UPDATE: The BBC is now reporting that Olympus has announced it cannot meet its November 14th schedule for reporting its quarterly earnings, and the Tokyo Stock Exchange responded by putting its shares under supervision and warning that Olympus will be delisted unless the earnings statement is issued within one month of the 14th. (Thanks to Mark Roberts for this.)

Mike
(Thanks to Vance Cowan)

P.S. Has anyone noticed that this situation seems an eerie parallel to the whole Joe Paterno story line, or is that just me?

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Comments

[Paul Luscher]

"....In that era, companies found they could make more money investing in land or stocks than you could in your main business...."

Now why does that seem so familiar?

[Richard Newman]

I wonder what this will do to the company's products. Olympus has a good reputation in both the photo and medical optics business.
Will they end up cutting costs at the expense of quality?
Will they become a takeover candidate, and be bought out by another company?
Will they go thru the Japanese equivilant of chapter 7 and restructure?
Will they go out of business, making their equipment collectors items?
Will their depressed (and possibly further depressed) stock prices make them an ivestors dream?
Or ???
Tune in tomorrow, as the drama unfolds....

[James B]

I have a suspicion that this will be the death - in current form - of Olympus. Someone more knowledgeable than me wrote in a comment on TOP that cameras are a very small part of the business. I wonder which other photography player might snap up that division? My guess would be that Canon may be interested, not having a mirror less lineup. That would convert Canon from being the outsider to being a major player in the major mirror less system, with all the rival companies less Panasonic all having their own niche mirror less system. Perhaps I'm trying to be too clever though, I have no idea of Canon's strategy or balance sheet.

[Mark Roberts]

Olympus shares have been put "under supervision", which sounds rather ominous. They may be delisted from the stock exchange entirely: http://www.bbc.co.uk/news/business-15669164

[Michael Ibach]

I couldn't agree more with your anointing of the World's Best Photography Magazine. ;-)

[misha]

"Will they become a takeover candidate, and be bought out by another company?"

I predict the camera division will be bought by Panasonic.

[Mike Johnston]

James,
I just wish I had a nickel for every "Canon should buy..." post that's ever appeared on the internet. [g]

Mike

[Luc N.]

Why is it that when a company making photographic equipment goes down or is in serious trouble people wish they should be bought by another one? Most of the time it makes more sense for the competition to just let them fold - their main business or their photo business. And Olympus photographic division doesn't seem to have any patents, special know-how or technology that others don't have.

[steve jacobs]

I doubt the camera business is worth much given the current competition. That's not to say that they have bad products-- quite the contrary. Still, how easy is it to compete with the bigs? I suppose one of them might buy the camera division just to shut it down.

The medical division is the real prize. I saw somewhere that they have 70% of the endoscope business world wide. That's where the bidding will take place. What a medical equipment company would do with a consumer camera business is anyone's guess, but it's probably not good for olympus camera fans.

[psu]

There might be similarities with the Penn State story, but a bit of funny bookeeping at Olympus is a pretty trivial matter compared to what happened in State College.

[Ken White]

The combination of wild speculation along with cozy relationships between company executives and auditing firms sounds very familiar. I think that is where my 401K money went a couple of years back.

Personally I think corporate malfeasance is so much more palatable than sovereign bankruptcy. We don't need to pay for the party.

[Eric Rose]

If Joe had reported what had happened to the police then yes I would agree with you. On the other hand he is a product of his generation. He would have felt and truly believed he had done the right thing by reporting this mess to his superiors.

Olympus will survive, in one form or another. You can bet your bottom dollar someone will make a pot full of money from whatever happens. It just won't be you or me.

[James B]

Mike,

I hadn't heard of your saying about nickels and Canons. Would you buy one of those diamond encrusted Leica editions covered in the skin of some exotic animal, with a full line up of lenses, or merely pay the electricity bill? Not being a Canonista, but I am in receipt of a large quarterly electricity bill, and I'm trying to gauge the scale of the analogy... The way things are going with electricity prices in the UK, it'll soon be cheaper to buy the Leica.

Anyway, I do hope that "whatever" is the best result for photographers, not businessmen and banks comes out of this sorry tale.

[Zeeman]

Or perhaps Ricoh-Pentax should buy the Olympus camera division. Then we'd have three great camera innovators under one roof! A good thought ;)

(Um, was I smoking anything before I typed this?)

[Bill Kearney]

Mike, your sense about a parallel to the Penn State mess may have a broader context. There is corruption on so many levels today, with the banks at the top of the pyramid. We've seen Enron, and we know the problems in Greece are intertwined with shenanigans by Goldman Sachs. It's unfortunate but not surprising to learn that Olympus was run by criminals.

[beuler]

On a related note, the Portuguese press is reporting that Gernut Bonack, Director of the Olympus factory in Coimbra, Portugal, was fired for allegedly denouncing a corruption case involving his superiors. He is now suing Olympus to the tune of 5 million Euros. (In the Portuguese case history, 500 thousand Euros would already be a substantial amount).
http://jornal.publico.pt/pages/section.aspx?id=74482&d=11-11-2011

[Bryce Lee]

Sweep the dust under the carpet; eventually it comes back to the surface.

The Penn State problem is not unique, nor is the Olympus problem. And since we're talking; look at profits companies involved in photo
gear make from other non=photographic fields.

Suspect the fired Penn State coach could be dead in six months; his reason to live
is gone. The rest, well jail terms are too
much of a simple solution. Always has been.

And with the emphasis on athletics these days; thought a university education was to expand learning, not line the pockets of the participants in extra curricular activities.

[Luc N.]

Steve:
"The medical division is the real prize."

I seriously doubt that Olympus will let go of that. They may sell the photographic division, but the medical is the money maker. Like office equipment is the real money maker at Canon, and so on...