After the hysterics - lets read carefully Locked

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MOD Tom Caldwell Forum Pro • Posts: 42,140
After the hysterics - lets read carefully

The announcement by Olympus has been posted by dpreview with comment by dpreview staff here:

Please read carefully before making a comment on this thread (especially the “Olympus words” as well as the journalistic comment.

I only make the post to bring back some rationality to the “oh my gosh we are all gonna die” posts and the reaction to the involvement of “the greedy Venture Capitalist JIP”.

I remind those who worry about what JIP might choose to do of the long running theme that has permeated this forum regarding the continuing stream of losses incurred by Olympus Camera division. Something needed to be done eventually.

Firstly the announcement says quite clearly that the proposal is to transfer the camera division assets to a fund known currently as “NewCo” - which might be an interesting badge on the faceplate of your E-M1iii ). In any case this is a company (financially?) managed by JIP and not necessarily owned by JIP. The announcement also said by way of clarification that “(Olympus would be) operating the business in conjunction with JIP” and that “the corporate structure would be more compact, efficient and agile” run this way.

Some blame is apportioned for the losses as due to “mobile phones”, but this could only be caused by the death of their useful pot boiler compact cameras which might have been good money for basic cameras. It cannot hold true for the current major camera body lines and premium lenses.

In fact reading between the lines I see an admission that it is the “less agile” management that needs overhauling.

My interpretation, for what it is worth, is:

Olympus is in a bit of despair that their efforts to make their camera division have not returned it to profitability. They have had some sort of conversation with bankers and there was a decision that the traditional management was not flexible enough to take it the last mile and effectively make the division profitable.

What I see is that independent advice has suggested a way forward. That the advice be followed to restructure the division first. This may be necessary because the multiple divisions so are tangled up in their management structures so much that a clean break after some untangling is necessary. In my experience where corporations run different divisions from under the same roof it gets very hard to allocate overhead rationally between divisions.

This slimmed down camera gear producing enterprise part is to be transferred into a “new fund” established as “NewCo” and importantly to be managed (not necessarily owned) by JIP. Some continuing involvement by Olympus seems to be anticipated. Presumably restricted to technical advice and expertise.

This leaves JIP as “the agile manager” of the new business which comprises the divested operating assets of the previous Olympus Camera Division. The mention of “funding” seem to indicate that some extra capital is to be injected to a “confirmed likely to be profitable New-Olympus”. This arrangement most likely to be a condition of whomever might have put up the additional funding.

Lots of scenarios on just how the funding might be arranged - it could be cash plus shares. But it is not my place here to speculate further. However it seems to me that JIP is to be appointed as independent manager to oversee the restructured division and some hard decisions will have to be made - most likely before NewCo - hence the delay.

Ultimately it is the shareholders of NewCo that matter most as to the future scenario. This might include share ownership by “Olympus Original” as the on-going slimmed down corporation might become.

If “NewCo” becomes profitable then at some stage JIP might step down as financial manager with their pot of gold from their services which might includes some free-carried shareholding (nobody should really expect them to be “Father Christmas”) - and “everybody happy”.

I emphasise that I know no more than what is in the official statement from Olympus - but anything else being touted as fact isn’t.

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Tom Caldwell

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