Panasonic on it's last leg

TaoTeJared

Interesting stories and write-ups on Panasonic. They have sold off 51% of its Imaging Division and has given them until March 2016 to become profitable or goodbye to Panasonic camera's.

I have read many accounts from various analysts that they are believing that only Canon, Nikon, and Sony can survive in the future. Even then, some have said that is only if Sony chooses to continue to dump money at the division and if Nikon learns a much better business practice and aggressively expands (read into that as in acquisitions.)

Considering that all the "small" camera competitors are really the only one's who are innovating for consumers, I'm not sure what the future holds. We often think of "next generation" in 4-year cycles. In four years, the landscape may become more barren than we expect.


According to Bloomberg and 43Rumors, Panasonic is currently citing a massive profit increase due to restructuring of the company. Essentially what they’ve done is what any other company would do when they’re not surviving–trim the fat! Combined with layoffs, part of this is attributed to getting rid of emphasis on things that aren’t profitable for the company like Plasma TVs. Bloomberg states,

“President Kazuhiro Tsuga, in his second year at the helm, is pivoting toward products for cars and homes as he accelerates changes to recover from back-to-back annual losses. Panasonic suspended plasma panel production, trimmed smartphone and circuit board operations and sold a stake in semiconductor factories to focus on growing businesses.”

What the articles aren’t really citing though is a report from the Credit Suisse earlier on this year that states that Panasonic recently sold off 51% of its Imaging Division. In fact, the company has given them until March 2016 to become profitable or else they get the axe. That means that within the next two years, we need to start seeing some seriously game changing technology from Panasonic. This will be a tough task overall for the Four Thirds industry as Panasonic needs to work with Olympus to become a stronger force in the industry. Micro Four Thirds has the most market share in the mirrorless industry, but the offerings that we’re seeing from Fujifilm and Sony are both taking massive Great White Shark sized bites out of them.

Panasonic has also changed up a lot of their game plan–with mostly trying to cater to pros and those reaching for higher hanging fruit.
http://www.thephoblographer.com/2014/02/05/panasonic-cites-massive-profit-partially-attributed-selling-51-imaging-division/

NSXTypeR

Wow, that's a shame, as m4/3 has great promise. Besides, the m4/3 system seemed to have been the most entrenched of the mirrorless systems.

WestEndBoy

I don't see much of a future in the m4/3 system. In my view, like CX it is not a sufficient upgrade to a smartphone and they should be able to make small DX sized cameras. I am not saying it has no merits, but it is/will be squeezed on both ends.

PB_PM

I wont miss Panasonic, Olympus's m4/3s bodies are far superior anyway.

TaoTeJared

But Olympus isn't doing well either financially. Panasonic's lenses are a bit better (with using Leica's designs) but Olympus's bodies are a bit better. Many though prefer the Video of Panasonic's system over any other DSLR-type system along with the extra reach the sensor gives.

If Panasonic does give it the boot, it doesn't necessarily mean it is going away. Anyone could buy it. Personally I think Panasonic's camera's would be a good fit for Nikon or Canon (as they have stayed out of the mirrorless market or have not put a huge investment in it), and even Fuji would work with Nikon either as well. That would be a hell of a shake up for sure.

Ade

Olympus has been doing quite well financially. They are expecting the camera business to return to profit this year, and FY2014 net income for the company soaring 62% compared to last year to 13 billion Yen.

Accordingly, Olympus stock has also soared over 43% in the past year.

http://www.bloomberg.com/news/2013-12-18/olympus-expects-camera-unit-to-return-to-profit-next-year.html

The big question is whether or not they can stay on the right track, with some slowdown in China and with the Yen possibly getting stronger again. They are due to release their 3rd quarter numbers tomorrow (Japan time) so we'll know soon enough.

PB_PM

Olympus's imaging division is currently projecting 2014 to be a profitable year, not something Panasonic can say. While Olympus's lenses may not be on par with Panasonic, they offer a much better range of lenses.

manhattanboy

I don't think Panasonic is dead yet.
They have a mirrorless that shoots 4K video now for example.
http://mobile.theverge.com/2014/2/6/5387296/panasonic-gh4-mirrorless-camera-4k-video

TaoTeJared

Olympus has been doing quite well financially. They are expecting the camera business to return to profit this year, and FY2014 net income for the company soaring 62% compared to last year to 13 billion Yen.

Accordingly, Olympus stock has also soared over 43% in the past year.

http://www.bloomberg.com/news/2013-12-18/olympus-expects-camera-unit-to-return-to-profit-next-year.html

The big question is whether or not they can stay on the right track, with some slowdown in China and with the Yen possibly getting stronger again. They are due to release their 3rd quarter numbers tomorrow (Japan time) so we'll know soon enough.

Ha! Now that is a joke. It is good only if you are dumb enough to think stock price equals how good the company is. Stock price does not make a company a single dime - just the investors. All the stock prices helps a company is so it can barrow more, and for how cheap - that is it. Anyway it can't do anything but go up, if you recall they got wrapped in a massive scandal at the end of 2011 where they paid over $600 million to a middle man for a acquisition and in an audit it was found that they did not meet standard accounting practices since the 90's. Their stock tanked over 80% of it's value in less than 30 days. Their 5yr net income average is -32% (yes that is negative.) Their profit margins can't even hit 1% and their return on Equity, Assets, and Capital are all in the red - which is horrible. All of their numbers are bad. The only company that was worse was Pentax, and they were bought by Ricoh.

I don't think Panasonic is dead yet.
They have a mirrorless that shoots 4K video now for example.

If you read the articles, you would see the company has given the division till 2016 to get it's numbers up. I'm sure they will be releasing a smattering of things to try to get something that will get some steam behind it and take off. Two years for a ton of growth where the market is going opposite, is basically death sentence.

Video codecs seems to be what really draws many to them, so it would make since for them to push a bunch of new products out, especially 4k. I don't do video so I don't fully appreciate what they offer, but all of the large video groups/shooters around me just use Panasonic because of the ease of post processing the files. Their second choice is Canon, but many have told me that is only if they are playing around, of if a shot requires a very shallow depth of field.

TaoTeJared

Olympus's imaging division is currently projecting 2014 to be a profitable year, not something Panasonic can say. While Olympus's lenses may not be on par with Panasonic, they offer a much better range of lenses.

I kind of wonder if Panasonic is trying to bait Olympus to buy their imaging division, the other way around, or put it out there for someone else to look at them. TowerJazz is the company that bought 51% of the division. Among the tech they make is Cmos sensors, so maybe they are the one's who are making many of Pani's sensors. Last I heard, Sony was making many of Olympus's - but I'm not sure who is making the small digi-cam sensors.

PB_PM

Olympus doesn't need Panasonic's imaging division, since they are partnered with Sony (which owns a good chuck of Olympus). Basically, if you buy Olympus camera today, you are buying a camera body with a Sony sensor, and Olympus design and firmware. I believe they also share some hardware, like the hybrid AF.

Panasonic has it's own sensor fab, unless they sold it, so I don't see why they would need someone else to make sensors for them. Until Sony partnered with Olympus, Olympus got their "LiveMOS" sensors from Panasonic.

Ade

Well it's day time in Tokyo and Olympus announced their 3Q numbers.The numbers speak for themselves.

http://www.olympus-global.com/en/ir/data/brief/2014/

The headline is 3Q operating income up 102.7%. Overall Olympus posted a profit of 13.7 billion Yen vs. a loss of 391 million Yen last year. They chopped losses from the camera business in half, and as mentioned before, expect the camera business to be profitable this upcoming fiscal year.

Their operating income was 21.4b Yen vs. net sales of 179.4b Yen for a healthy 11.9% margin.

Furthermore, they reiterated their full-year guidance for FY2014 ending next month:

Operating Income: up 106.7% to 72.5b Yen
Ordinary Income: up 283.3% to 50b yen
Net Income: up 62.1% to 13b yen

Net sales will be slightly down this year only because last year's numbers included revenue from subsidiary ITX Corporation (which makes mobile phones) which they have since sold. Also unlike other camera makers which are predicting double-digit contraction, Olympus net sales from their camera business is only expected to decline 3% this fiscal year.

In Tokyo, Olympus stock jumped 3.32% for the day on the news, easily outpacing the Nikkei.

TaoTeJared

You should really stick to what you actually understand. For 5 years I gave operational analysis to boards for multiple fortune 1000 companies. Those numbers are not good - and their imaging division is really not good.
Those are quarterly results, and your assumption is that last year was a good year for them - it was absolutely awful for them and one of their worst performing years. So to say they are doing better - is not saying much. If you want to know how a company is doing, you never look at the Q:Q numbers, only YTD, and at that they are only 40bil (yen) ahead of last year with massive 50% cuts to staff and facilities - mostly in their imaging division by the looks of things. Their Imaging division (only thing we should be concerned about) is posted almost a 13% drop in sales and that is with two large camera body releases this last three quarters where the previous three quarters didn't have any. And with a more favorable Yen-$. That is bad - real bad. Most companies have a big bump with major body releases.
Add to the non-operating losses and extraordinary losses they are taking, they are not in a good position.

If you want to trade futures and stocks, that is a whole different set of analysis of what is good. As for operational analysis, it is not good for them. Only their Medical division is doing well and their Imaging division is dragging them down.

BTW 1billion yen = 9.77mil. Net income up 13b is only $12.7m US. That is no money for a company that size.

WestEndBoy

Olympus also has some fundamental corporate governance issues that have only been sugarcoated, not resolved. In Japan, if the CEO of a large company promises to the Japanese version of the IRS to ensure that the right amount of tax is paid, they will not audit. Olympus had the privilege yanked and has not had it given back. To me that is more insightful than the stock price.

Ade

It's precisely because regulators in Japan, US and UK are still watching Olympus very closely that investors have confidence in their books and their shares.

The fact is, Olympus is now a profitable company, vs. posting quarter after quarter of losses in the past.

Let's look at their YTD performance (in millions of Yen)

Q1: 1,831 loss
Q2: 6,107 loss
Q3: 13,781 profit
Q4: 7,157 profit (estimated)

FY2014 total: 13000 profit (estimated)

That's quite a turnaround after the 1H losses. I.e., they will be posting 20 billion Yen profit in the last two quarters. That's nothing to sneeze at -- as a comparison, Nikon is expected to post 36.4 billion Yen profit in the same period, and Nikon is a much larger company.

Olympus like everyone else is aggressively paring down their Point & Shoot business so of course net sales from the camera division will be down. But focusing on net sales is dumb when you're losing money on those sales. Instead, Olympus is trading sales for income, by getting rid of unprofitable product lines and by reducing overhead. That is why they are predicting that their camera business will be profitable in FY2015.

WestEndBoy

I hope you are right. I would like to see both Olympus and Pentax thrive. I could care less about Sony, Panasonic and Samsung.

NSXTypeR

I hope you are right. I would like to see both Olympus and Pentax thrive. I could care less about Sony, Panasonic and Samsung.

Sony's made some pretty cool products- the RX100 is still the advanced compact camera to beat in my opinion. You can fault them for not sticking to one formula, but you got to give them an A for effort haha. They've tried everything!

PB_PM

I hope you are right. I would like to see both Olympus and Pentax thrive. I could care less about Sony, Panasonic and Samsung.

Without Sony, Olympus (at least a quarter owned by Sony) and Pentax (owned by Rioch) could be in trouble, since Sony supplies their sensors. The Pentax brand is slowly but surely being merged to the parent Rioch brand, so I suspect that name will fade into oblivion in the next few years.Both could switch to Toshiba and Aptina sensors like Nikon has been over the last few years, but Sony makes some extremely good sensors.

As for Samsung, they wouldn't know how to make a good camera if someone threw it in their developers faces. Panasonic actually makes some good cameras, but they don't sell enough to maintain that part of the business.

Ade

I think Sony owns around 11% of Olympus, maybe a bit more or less, but definitely not a quarter.

Olympus buys parts from Sony, but conversely Sony also buys parts from Olympus. This arrangement makes both companies more efficient by avoiding duplication of work in both companies. It also generates another source of income for both companies.

Ade

Ok the article quoted by TTJ cites "... a report from the Credit Suisse earlier on this year that states that Panasonic recently sold off 51% of its Imaging Division. "

Turns out, this is not true at all. What Panasonic actually did was to spin-off a fraction of its semiconductor division, part of its Automotive & Industrial Systems business, to a new joint-venture that is 51% owned by Tower Semiconductor, 49% owned by Panasonic. Under the deal, the new JV will gain three of Panasonic's plants which produce various devices including image sensors, intelligent power devices and LSI processors.

(Panasonic will still independently operate 9 other semiconductor manufacturing plants, 3 in Japan plus 6 more overseas.)

http://panasonic.net/ir/relevant/2013/en131220.pdf

So Panasonic is actually divesting a part of its sensor business, which is very different from selling 51% of its "Imaging Division".

TaoTeJared

If you stopped being concerned about making me look "bad" and attack me as usual, you may actually find the facts or maybe even learn something.

Divesting = selling off. If you Divest your interests, you are reducing your ownership, which is selling it off. It is just a softer way of saying "we want out" or, "we owe X company so much that we have traded debt for giving them interest in in a division/company." Companies do this all the time. When a company sells 51% of a division, it has to be spun off in it's own company- that is inherently understood. You can't retain "ownership" if you own less than 50% - a new company must be created.

As for the company (if you weren't trying to attack me and actually looked at the company)...
Tower Semiconductor Ltd. and its fully owned U.S. subsidiary Jazz Semiconductor, operate collectively under the brand name TowerJazz

You can't spin yourself out of this one - just leave the thread.

TaoTeJared

I hope you are right. I would like to see both Olympus and Pentax thrive. I could care less about Sony, Panasonic and Samsung.

Without Sony, Olympus (at least a quarter owned by Sony) and Pentax (owned by Rioch) could be in trouble, since Sony supplies their sensors. The Pentax brand is slowly but surely being merged to the parent Rioch brand, so I suspect that name will fade into oblivion in the next few years.Both could switch to Toshiba and Aptina sensors like Nikon has been over the last few years, but Sony makes some extremely good sensors.

As for Samsung, they wouldn't know how to make a good camera if someone threw it in their developers faces. Panasonic actually makes some good cameras, but they don't sell enough to maintain that part of the business.

Pentax sounds like it will remain as Ricoh wanted the "brand name" for marketing. (At least for DSLR-type systems.) That is what I read from an interview with a Ricoh rep at the time.

Sony has ownership in a bunch of companies. I even think they have some Nikon as well. Some companies actually have a "finical" arm that buys and trades stocks. The difference is when a company either creates new stock for a company, provides preferred stock, or if it is just the "general" public stock. Sony bought preferred stock - which means they want a say in the business (layman terms) and not just trading stocks. That is a quite a big step and could lead to something down the road.

Ade

Ok I'll make this understandable for anyone.

Panasonic divested part of their semiconductor business. Specifically, 51% of three semiconductor plants (out of 16 plants Panasonic owned at the time).

They have not "sold off 51% of its Imaging Division".

Really, it's simple. Divesting 51% of three semiconductor plants does not equal selling 51% of Panasonic's "Imaging Division", no matter how you look at it.

PB_PM

Pentax sounds like it will remain as Ricoh wanted the "brand name" for marketing. (At least for DSLR-type systems.) That is what I read from an interview with a Ricoh rep at the time.

That's what they said when they acquired Pentax, no doubt about that. Not that dropping the Pentax brand could hurt them any, considering that the two brands have less than 10% market share combined. I brought this up because three formally "Pentax" branded P&S cameras, that had updates released this week, dropped the "Pentax" branding in favor of Ricoh. So far the DSLR, and the 654D are slated to retain the "Pentax" brand, but for how long? Even the K-3 has "Ricoh" on the rear LCD, not Pentax.

Ade

It has been Ricoh's plan to drop the Pentax name from P&S cameras, so that's nothing new. From 2012:

"All future compact cameras will be under the Ricoh brand while DSLR and mirrorless camera will be under the Pentax name."

http://photorumors.com/2012/07/13/pentax-ricoh-products-shuffle/

The "Pentax" brand now signifies certain product lines (vs. a company name) -- much like Nikon's "Coolpix" or Canon's "Rebel".

TaoTeJared

Ok I'll make this understandable for anyone.

Panasonic divested part of their semiconductor business. Specifically, 51% of three semiconductor plants (out of 16 plants Panasonic owned at the time).

They have not "sold off 51% of its Imaging Division".

Really, it's simple. Divesting 51% of three semiconductor plants does not equal selling 51% of Panasonic's "Imaging Division", no matter how you look at it.

No Ade you are off base worse than a 8 year old in a tee-ball game.

Definition of 'Divestment'

The process of selling an asset. Also known as divestiture, it is made for either financial or social goals. Divestment is the opposite of investment.
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Their imaging division is inside their semiconductor business that was sold. If you knew how to read a finical report you would have known that.

Here is excerpts of their full description:



Original


Your welcome for correcting you on the information.