Previous news story    Next news story

Panasonic reported as planning $630m stake in beleaguered Olympus

By dpreview staff on Jun 6, 2012 at 00:11 GMT

Panasonic is finalizing a substantial investment in troubled medical and camera company Olympus, according to reports from Japan. The Kyodo news agency is saying that Panasonic will invest around ¥500bn ($630m) in the business - making it the company's largest shareholder. Panasonic has little presence in the medical market, so it seems likely the move is as much about ensuring the continuation of its partner in the Micro Four Thirds collaboration, which could have been jeopardized if the much-needed tie-up had been with a rival camera maker.

Earlier reports from Kyodo suggested that Olympus will announce an updated post-scandal business plan this Friday (June 8th), which could see a more formal announcement of such a deal. Olympus has repeatedly said it would seek a partner as it attempts to recover from an accounting scandal that had seen its share price plunge as it acknowledged losses of $1.7bn had been covered-up. Fujifilm, which also has extensive medical interests, was long rumored to be interested in a partnership.

Update: Panasonic President Fumio Ohtsubo has subsequently denied the reports.

Comments

Total comments: 39
choushin
By choushin (Jun 22, 2012)

Sony, instead of Panasonic, is reported today by Nikkei to invest 50 billion in Olympus and become its biggest shareholder!

Panasonic has finally decided not to accept this deal by yesterday, 21st of June.

0 upvotes
Puffer Fish
By Puffer Fish (Jun 12, 2012)

I hope everyone understands just how interrelated these two companies are with the 4/3rds. I know the flash controls for Panasonic are made by Oly and obviously the sensors for Oly are made by Panasonic. I would guess, they share a lot more items than that. Kill Oly, and it most likely will cause a huge loss at Panasonic and might even kill 4/3rds.

As Panasonic is also not profitable, one wonders how this will end up effecting Panasonic. Say Fuji buys into Oly, and they make Oly's sensors and Panasonic then takes a huge loss in their sensor business.

Even worse, say someone else buys Oly, and just kills the camera division (which would make great sense, as Oly's camera division has been loosing money)?

Panasonic would be hit with huge losses and might also be out of the 4/3rds business.

For Panasonic to not be interested in investing in Oly can only mean they have some other plan.. wonder what it is?

0 upvotes
Francis Carver
By Francis Carver (Jun 11, 2012)

Good-bye, Olympus.

The last company that Panasonic invested in was SANYO, and Panasonic had killed it off good and proper. Good luck being able to buy any SANYO branded closed circuit video camera or video projection gear today. Same thing will happen to Olympus. It was good while it lasted for them, though.

0 upvotes
evshrug2
By evshrug2 (Jun 8, 2012)

The breadth of µ4/3rd's system, born from having two companies developing first-party products (and a few accessories manufacturers making µ4/3rd's mount stuff), is one of the greatest strengths over the other mirrorless systems. I can't tell what this will result in... it might've been cheaper for Panasonic to just buy Oly's photography assets, and probably the investment would not have been enough money to buy out the medical imaging department.

Why would panasonic expand into that industry anyway? Their market is consumer electronics. They might as well go into the ATM Banking market as much as they would go into medical imaging.

Most likely they invested because of their common link, they want to keep Oly alive because "the enemy of my enemy is my friend." Could this be some sort of sentimental move to keep µ4/3rds interesting?

Comment edited 1 minute after posting
0 upvotes
evshrug2
By evshrug2 (Jun 8, 2012)

Or would that have been enough to buy out the medical division too? I don't know, I was just comparing the investment size to the amount of Oly's covered-up losses, and the business sense of buying into a new market when Panasonic is trying to make one of their existing markets continue to work.

Egads, if Oly just boarded up, wouldn't the reprecussions on equipment supply in the medical imaging sector and sudden $1.7bn economic hole in the japanese economy – that nobody would take responsibility for repaying from profits – be really damaging in the near future?

0 upvotes
Rupert Bottomsworth
By Rupert Bottomsworth (Jun 10, 2012)

Why shouldn't Panasonic expand in to other industries? If medical imaging is profitable, it would be a wise move by them to do so. They should also ditch their loss making TV division.
By the way, Nokia started out as a paper manufacturing company. Look at their business now. My point being businesses shouldn't necessarily limited themselves to one specific industry.

0 upvotes
evshrug2
By evshrug2 (Jun 11, 2012)

I suppose you have a point, I guess mine is just that it's not within Panasonic's core competencies, and that sometimes quality suffers when a company loses focus. It's possible that Panasonic could just have a med-imaging company-within-a-company and do alright.

As far as your TV division comment, I get the feeling from the super discounting that goes on that it's not an entirely profitable industry in general... tho a necessary one. I would be particularly sad to see Panasonic leave that market, I love my Plasma I bought last year, I really feel I got near-peak visual quality at a price I could afford.

0 upvotes
jon404
By jon404 (Jun 8, 2012)

Hope they bring out an XZ-2 before reorganization time.

0 upvotes
Tom Caldwell
By Tom Caldwell (Jun 8, 2012)

So Panasonic might buy the medical side and allow Olympus to sink or swim with its camera division?

Both the reports are true then after a fashion.

0 upvotes
DaveMarx
By DaveMarx (Jun 8, 2012)

$630 million is way too much to pay simply to protect m4/3. It would probably be cheaper to let m4/3 die altogether. Not that I think Oly's place in that partnership is essential at this point. If anything, it leaves Panasonic in a position to pick up the Oly owners who have already invested in m4/3 glass.

The medical business is the real target, whoever might invest/acquire. If cameras don't fit the new owner's plans, they'll be spun-off in a blink.

If someone like Sony buys Oly... Everyone here assumes the only possible motive is to stifle competition, but buying into m4/3 is also a way to increase market share. Kill it altogether, and there's no telling where Oly's customers would go next. The real competition is mirrorless vs. DSLR, not m4/3 vs. NEX. The more excitement and innovation there is in mirrorless, the better.

What I doubt (but you never know) is that the m4/3 partnership agreement is written in such a way that either partner is up the creek if the other is sold.

0 upvotes
peacefrog33756
By peacefrog33756 (Jun 11, 2012)

As Olympus goes, so will go the future of m4/3.

0 upvotes
mmcfine
By mmcfine (Jun 8, 2012)

Who cares? really.
companies come and go, so do people and money.

0 upvotes
Rupert Bottomsworth
By Rupert Bottomsworth (Jun 10, 2012)

And cameras :)

0 upvotes
Jsayles86
By Jsayles86 (Jun 7, 2012)

I also read that Olympus laid off approx. 2500 workers (7% labor force) in their camera division. I think I will put off ordering that new OM-D.

0 upvotes
CurtisLewis
By CurtisLewis (Jun 8, 2012)

It's also been reported that Panasonic cut 17,000 workers (50% labor force) and Sony another 10,000.

0 upvotes
Raist3d
By Raist3d (Jun 7, 2012)

Panasonic denied the report? wow lol. Wonder where this came from then.

0 upvotes
Cy Cheze
By Cy Cheze (Jun 7, 2012)

Panasonic is not a "rival camera maker" from Olympus' vantage? Will it maintain manufacture of the Olympus cameras just for the sake of "fair play," so that Lumix market share or margins not grow too much? Is Panasonic faced with a surfeit of profits these days?

The profitable medical imaging business is not of strategic interest?

More likely, Panasonic is interested in the medical imaging sector as a growth opportunity, and will "manage" the Olympus camera business to reduce competition by holding back production or elimination of redundancies and overlap. Some consumer P&S will models simply phase out. The GH3 body will be more expensive than the OMD EM5, but all m4/3 lenses and accessories will remain premium priced and relatively scarce.

0 upvotes
evshrug2
By evshrug2 (Jun 8, 2012)

I think the "rival camera maker" was from Panasonic's perspective, i.e. if one of Panasonic's camera maker rivals (who are not part of µ4/3) bought into Oly and killed off half of the µ4/3rd's development.
The breadth of µ4/3rd's system, born from having two companies developing first-party products (and a few accessories manufacturers making µ4/3rd's mount stuff), is one of the greatest strengths over the other mirrorless systems. I can't tell what this will result in... it might've been cheaper for Panasonic to just buy Oly's photography assets, and probably the investment wouldn't have been enough money to buy out the medical imaging department.
Why would panasonic expand into that industry anyway? Their market is consumer electronics. They might as well go into the ATM Banking market as much as they would go into medical imaging.
Most likely they invested because of their common link, they want to keep Oly alive because "the enemy of my enemy is my friend."

0 upvotes
choushin
By choushin (Jun 7, 2012)

Panasonic has just scrapped their billions of investment in the plasma factory but yet spared billions buying into camera (and medical) business...
Photography is still a good business though chronologically much older than the electronics industry!

0 upvotes
theglovenor
By theglovenor (Jun 7, 2012)

as a business cameras are pretty irrelevant to olympus compared to the medical side of things....microscopes/scanners etc

0 upvotes
camcom12
By camcom12 (Jun 7, 2012)

I have a mixed analysis on this, especially how it could affect the micro4/3 market going forward. On one side it might stabilize, and reduce the risk of Olympus, in a worse case scenario, backing out of the 4/3 market.

But on the other the side, competition and innovation could decline, essentially making m4/3 a single-sourced product like the other camera manufacturers.

Comment edited 3 minutes after posting
0 upvotes
CarlPH
By CarlPH (Jun 7, 2012)

The Panasonic's President Denied this news and said they have no plans in invensting at Oly as of yet. (from the same reuters website)

http://www.reuters.com/article/2012/06/07/us-panasonic-olympus-idUSBRE85604G20120607?type=companyNews

3 upvotes
Paul Farace
By Paul Farace (Jun 7, 2012)

Good move IMHO... too many competitors in this "second tier" strata of photo industry players... combining the two would result in a larger player capable of moving up to the top tier maybe! And some great cameras as well.

0 upvotes
tkbslc
By tkbslc (Jun 7, 2012)

Perhaps as the largest shareholder, Panasonic can make Olympus less of a direct competitor in 4/3 and more of a complementary one.

0 upvotes
justmeMN
By justmeMN (Jun 7, 2012)

Panasonic stock recently (May) hit a 30-year (yes, year) low, so they aren't a very financially strong partner.

2 upvotes
MichaelEchos
By MichaelEchos (Jun 7, 2012)

Negative negative positive. :D

2 upvotes
LJohnK2
By LJohnK2 (Jun 7, 2012)

Olympus is a great example of technical ingenuity being engineering into irrelevancy by incompetent upper management and corruption up to the Board....I'm surprised Panasonic wants to touch them.

4 upvotes
Raist3d
By Raist3d (Jun 7, 2012)

Well the idea is that Panasonic would get quite the say in choices now. Also keep in mind Panasonic m4-3rds format really depends on Olympus too.

2 upvotes
evshrug2
By evshrug2 (Jun 8, 2012)

I suppose if it was me (and I'm a nobody) and I had a significant stake in the development of µ4/3rds, I would invest money into reigning in that incompetent upper management to save that technical ingenuity.

Panasonic's choice not to just "go it alone" though is interesting. Maybe the publicity of a µ4/3rds manufacturer going under would kill the entire "consortium." I bet Panasonic is really upset with Oly and just trying to make profit on their existing high-end camera investment.

0 upvotes
Glen Barrington
By Glen Barrington (Jun 7, 2012)

Don't care. Neither Oly OR Panasonic are making cameras I'd want to buy. My E30 is likely the last Oly I will own.

4 upvotes
dark goob
By dark goob (Jun 7, 2012)

The E-M5 is amazing... you really should try it. If Canon made a mirrorless 135-format then I might switch, but I'm addicted to IBIS with OM-series and Nikkor AIS lenses as of now, AoV affects notwithstanding!

4 upvotes
AbrasiveReducer
By AbrasiveReducer (Jun 7, 2012)

Makes sense. No need for a camera manufacturer to buy a camera manufacturer but medical stuff is entirely different. People will say "I'll buy that new Olympus camera when the price drops" but hospitals and research labs just buy what they need and pay what it costs.

0 upvotes
Raist3d
By Raist3d (Jun 7, 2012)

Makes perfect sense. I have always said if Olympus Imaging went down, Panasonic would buy them.

0 upvotes
Alizarine
By Alizarine (Jun 7, 2012)

If it's going to help Oly, why not? The OMD EM-5 is an excellent sample of what the company can still do. It's just the financial execs that deserve an upgrade, the engineers can stay.

8 upvotes
J. Qian
By J. Qian (Jun 7, 2012)

500 billion yen??? I think it's an error by enlarging 10 times the yen value.

1 upvote
tonywong
By tonywong (Jun 7, 2012)

Yes, 500B Yen is about 6.3B USD. Hope Pansonic's accountants don't make a similar mistake.

0 upvotes
peevee1
By peevee1 (Jun 7, 2012)

Whole capitalization of Olympus is about $5B (Panasonic is about $15B, just like Sony).

0 upvotes
tonywong
By tonywong (Jun 7, 2012)

Disappointing that the board was replaced wholesale. I think there is plenty of cronyism and opaque management in Japanese style management that is demonstrated in the Olympus debacle.

0 upvotes
Kodachrome200
By Kodachrome200 (Jun 7, 2012)

prolly good. olympus is doing neat stuff right now. hate to see the have to stop

4 upvotes
Total comments: 39