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[OM] Re: Olympus Trouble

Subject: [OM] Re: Olympus Trouble
From: "BILL CLARK" <BCLARK@xxxxxxxxx>
Date: Wed, 10 Nov 2004 13:05:27 -0500
Post looks funny, it should be:

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Japanese precision equipment maker Olympus Corp said on Tuesday it will boost 
in-house production of digital cameras to 50 percent in one or two years to 
help nurse its loss-making camera division back to health.

Olympus currently outsources 60 per cent of its digital camera production to 
other firms including Sanyo Electric Co, giving it less flexibility to adapt to 
market changes than rivals such as Canon Inc, which produces all its cameras 
in-house.

The move is part of a broader plan to strengthen its camera operations after 
steep price falls and sluggish sales of digital cameras caused a 57 per cent 
decline in its net profit for the April-September first half.

Its imaging division, primarily digital cameras, posted a first-half operating 
loss of $27.49 million and is expected to show an 18 billion yen loss for full 
year to March as it disposes of inventory and copes with further price falls.

"We would like to raise our internal production to 50 per cent and expect that 
measure to improve profitability," Olympus president Tsuyoshi Kikukawa told a 
briefing. "I am sure digital cameras will be in the black next business year."

In addition to raising in-house production, Kikukawa also vowed to bolster 
direct sales channels, make its production process more efficient and 
strengthening its development of key parts by working with chip makers and 
other suppliers.

Olympus said it will reduce digital camera inventories to below two months by 
the end of March. Weak sales caused inventories to swell to 2.6 months as of 
September 30, more than 50 per cent above the 1.7 months at the same time last 
year.

The company would not disclose the size of the loss it expected from the 
inventory reduction, but disposal costs are one reason Olympus is forecasting 
its group net profit will tumble 59 per cent to 13.5 billion yen in the full 
year to March.

Olympus has blamed its woes in the digital camera business on general market 
weakness and its inability to introduce models that match consumer needs. It 
estimates its global market share has fallen to 11 per cent from 13 per cent a 
year ago.

The company recently lowered its digital camera shipment target for the full 
year to 9.5 million units from 11 million, but said on Tuesday it expects sales 
to increase 10 to 15 per cent in the 2005/06 business year, helped by new 
models.

Olympus is banking on strong sales of a new digital single lens reflex (SLR) 
camera that will be priced low enough to compete with Canon Inc and Nikon Corp, 
which dominate the fast-growing and high-margin segment of the market.

It also has high hopes for a portable music player able to store photos, 
although this product will face tough competition from Apple Computer, which 
last month launched a new iPod that allows allows users to view and share 
photos.

Outside the digital camera area, Olympus announced plans to list subsidiary ITX 
Corp on the Tokyo Stock Exchange's first section in the near future, a move 
that would likely spur buying by institutional investors that track the TOPIX 
index of all first-section firms or only invest in issues listed on the TSE's 
main board.

ITX, a business incubator in the high-tech and life science fields that Olympus 
made into a majority-owned subsidiary earlier this year, is currently traded on 
the Osaka Securities Exchange's Hercules market for start-ups.

"It would be in the near future. I'm not talking about five or 10 years," 
Kikukawa said, adding that it planned to halve ITX's parent-only 
interest-bearing debt to 30 billion yen by the business year to March 2007.

-----------------------------------------

Strange that Oly says they cannot introduce models to match consumer demand!!!!

They should have made a new 2100UZ and an E30


>>> wincros@xxxxxxxxxxx 11/10/04 12:58pm >>>

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Olympus to hike in-house digital camera output

Reuters
Tokyo,=A0November 9



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