I just don't get these 2001 prices??

Started Jan 7, 2012 | Discussions thread
Digetydog
Contributing MemberPosts: 976Gear list
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Re: D3/D4 line is 1-2% of Nikon total DSLR sales.
In reply to Petruska, Jan 8, 2012

In order to be profitable, a corporation must be able to recover more than the cost of its capital to survive. If they don't, they go the way of Polaroid and Kodak.

Canon and Nikon have thrived over the past XX years b/c they have been able to develop and sell a range of cameras to consumers at all levels of sophistication and price points.

To do that, they have to be able to pay for the R&D, marketing, manufacturing, shipping, service and distribution system needed to support their products.

Curious about Nikons profits and loss, I looked up their financials which are available online. Reviewing their financial statements:

  • the earned (-5%)-20% on their equity. Not fantastic with a rough average less than 10%

  • they are not growing fast enough to be a stellar company

  • they spend 6-7% of their net sales on R&D cost. They also spend quite a bit on capital expenditures.

  • they lost 2.3B yen on the earthquake.

Annual Statement Financials: http://www.nikon.com/about/ir/ir_library/ar/pdf/ar2011/11annual_e09.pdf

My brief evaluation: they are profitable, but they are probably not generating the quality of earnings that would make me consider buying their stock. Overall, their profit margins are not that high for a mfg company.

With respect to the pro market, I suspect that it is largely a break even proposition for both Canon and Nikon because of the low number of units involved and the amount of work that is needed to service each sale. For example, I doubt many compact camera buyers send in cameras for AF fine tune adjustments.

Petruska wrote:

do the math, they need to cover all the R&D and developmental/tooling costs with a same quality of cameras.

The D700 sales are about 3-5% of total DSLR sales, again a small quantity sold, that is why the D800 is going to be much higher in price also.

Thus 90% of all DSLR sales comes from the DX lines, the production demand covers the R&D costs easier.

Then we have the dollar/yen valuation issue....

Bob P.

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