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05-09-2019, 11:53 PM   #1
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Mirrorless and DSLR dinosaur collapse cont'd: Nikon profits down -27%, sales -18%

Comparing full years Nikon is joining the party of losers (same as Sony and Canon before):
  • profits down -27% (from 30 bln yen to 22 bln yen)
  • sales -18%
Nikon | Investor Relations | Financial Results and Presentation Materials

The loss of profitability looks better than Canon's and Sony's but Sony's -73% profit plunge figures were more focused on last quarter compared to last quarter the year before.

They are already preparing investors for further drops in profitabilities (the forecast for next year is 12 bln yen, so a further plunge of -45%):

"In the Imaging Products Business, given the rapid advances in surrounding technological environments
and increasing sophistication and diversification of digital cameras, continual investment is required for the
development of new technologies and new products. There is, however, a possibility of a decrease in profit
in the event that investment does not produce adequate results to fail to develop or bring to market new
products or next-generation technology in a timely manner or there is an abrupt shift in demand to higher
functioning digital equipment. In addition, should a competitor acquire a patent on a new technology, there
is a danger that the production and/or sale of a product will be suspended or of a decrease in profit margin
due to the payment of royalty, which may impact profit."



The good news they state:
"As for digital cameras, which are the leading products of the Imaging Products Business, there is a possibility that competitors will launch an offensive with low-priced products as the market matures."

05-10-2019, 02:34 AM   #2
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Q1 2019 sales of photographic equipment. Panasonic don't report on this specific activity.

05-10-2019, 05:25 AM - 1 Like   #3
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QuoteOriginally posted by beholder3 Quote
should a competitor acquire a patent on a new technology
That seems awfully specific. They probably have something in mind, and likely regarding mirrorless since they seem to invest all their money there for the moment.
05-10-2019, 06:16 AM   #4
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QuoteOriginally posted by bdery Quote
That seems awfully specific.
Yes, it appears there is something specific they are afraid of. Would love to know what it is. Wouldn't it be great if it is a Ricoh patent they are worried about? Hybrid viewfinder?

05-10-2019, 02:06 PM - 1 Like   #5
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QuoteOriginally posted by rangercarp Quote
Yes, it appears there is something specific they are afraid of. Would love to know what it is. Wouldn't it be great if it is a Ricoh patent they are worried about? Hybrid viewfinder?
Which Nikon camera currently in production has a hybrid viewfinder? More like it is IBIS. There array looks a lot like Sony's array.
05-10-2019, 02:47 PM   #6
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It say Ricoh market share is up .3% but their sales are up 4.4%. The only green on the sales chart. Looks like profit over market share is working.

And they say Pentax doesn't have plan.
05-10-2019, 02:53 PM   #7
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QuoteOriginally posted by normhead Quote
It say Ricoh market share is up .3% but their sales are up 4.4%. The only green on the sales chart. Looks like profit over market share is working.

And they say Pentax doesn't have plan.
Who ever said Ricoh doesn’t have a Plan?
05-10-2019, 03:07 PM - 2 Likes   #8
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QuoteOriginally posted by normhead Quote
It say Ricoh market share is up .3% but their sales are up 4.4%. The only green on the sales chart. Looks like profit over market share is working.

And they say Pentax doesn't have plan.
Smart Vison sales are up 4.4% and their market share is up 30bp or 25% (the market went down 17%).

The increase in Ricoh Imaging sales in Q1 2019 (calendar year) compared to Q1 2018, ¥300m (= $2.7m), corresponds roughly to the sale of 5,000 Ricoh GR IIIs to the distribution channels.

Whilst very welcome and going against market trend, this increase shan't therefore be considered as a final victory.

05-10-2019, 03:54 PM   #9
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Nikon has a cost structure problem along with a sales problem in Imaging Products, their operating profit margin dropped from 8.4% in 2018 to 7.4% in 2019 and even more alarming is the forecasted drop to 4.6% in 2020. It appears that the corporate planners missed the memo about begging for forgiveness being preferable to asking for permission, otherwise they would have forecast a result that shows how they are hard they are working to reverse declining margins. Unit sales of ILCs dropped by 21.4% in 2019 and are forecast to drop by 22.3% in 2020 (-25.3% and -23.9% if you include lenses and compact cameras), but average revenue per unit is increasing slightly.


The number of employees was drastically cut in the 2018 fiscal year (mostly outside Japan) and capital expenditures dropped by 25.4% in the 2019 fiscal year so it is hard to say what economy of scale albatrosses are still hanging on Nikon. The forecast is to maintain Imaging Products' R&D expenses at close to 2018 and 2019 levels and while capital expenditures are only forecast for the entire corporation, that is planned to increase by 32.5% compared to 2019 (and be virtually the same as 2018). Imaging Products is forecast to represent almost 40% of Nikon's total revenue in 2020, they can't expect the lithography business to carry the entire corporation.

Focusing on profit makes sense for investors, but often doesn't convey much information about how well the company's operations are doing.
QuoteOriginally posted by beholder3 Quote
a possibility of a decrease in profitin the event that investment does not produce adequate results to fail to develop or bring to market newproducts or next-generation technology in a timely manner or there is an abrupt shift in demand to higherfunctioning digital equipment
This reads to me like a deliberately obscure statement, timeliness (being a market leader) can be a negative in a market that has no potential for growth and "an abrupt shift in demand to higher functioning digital equipment" is a funny way to say that demand for compact cameras and entry level DSLRs fell off a cliff, so now we can only sell high margin D850's and Z's. Neither of those factors should hurt profitability into the future, unless there is still some painful downsizing to take place, that should have already happened.

---------- Post added 05-10-19 at 05:00 PM ----------

QuoteOriginally posted by Mistral75 Quote
The increase in Ricoh Imaging sales in Q1 2019 (calendar year) compared to Q1 2018, ¥300m (= $2.7m), corresponds roughly to the sale of 5,000 Ricoh GR IIIs to the distribution channels.
Great piece of analysis. As the overall market shrinks, outliers like the release of an obscure APS-C compact camera with a fixed, single focal length lens can move the needle. As long as SmartVision can keep something flowing through the product pipeline and stay in the black, the product line has a future.
05-13-2019, 07:29 AM   #10
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QuoteOriginally posted by D1N0 Quote
Which Nikon camera currently in production has a hybrid viewfinder? More like it is IBIS. There array looks a lot like Sony's array.
Obviously none, but neither does any current Pentax camera CURRENTLY in production. However, I do recall a Ricoh patent for some sort of a hybrid viewfinder. It is possible that Nikon is working on something similar and is worried about infringing on Ricoh's patent. I realize this is wishful thinking, and I intended to frame it as such. "Wouldn't it be nice if it is a Ricoh patent they are worried about? If it is, what would it be?"

That being said, your guess of Sony's IBIS sounds plausible. At the same time, it would seem to me like it could be something that is still under development and not in any current cameras. The wording suggests they do not yet know if they are infringing on someone's patent. This could be because the product is incomplete and they are still trying to work around a patent. On the the other hand, maybe Sony sued Nikon for copying their IBIS system and they are waiting on a judgment that may result in paying royalties to Sony.


It is a cryptic statement that lends itself to speculation.

Last edited by rangercarp; 05-13-2019 at 09:38 AM. Reason: typo
05-13-2019, 07:43 AM   #11
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QuoteOriginally posted by monochrome Quote
Who ever said Ricoh doesn’t have a Plan?
The famous "they". Come on, I know you know them.
05-13-2019, 07:44 AM - 1 Like   #12
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QuoteOriginally posted by rangercarp Quote
The wording suggests they do not yet know if they are infringing on someone's patent. This could be because the product is incomplete and they are still trying to work around a patent. On the the other hand, maybe Sony sued Nikon for coping their IBIS system and they are waiting on a judgment that may result in paying royalties to Sony.
This type of statement only makes it into financial reports if a claim has been served, but no details have to be provided until it enters the public record (makes it as far as a courtroom or a settlement has been filed with regulators). Failure to disclose this vague risk means that if it should ever become public, insiders have committed a wrong, which is frowned upon in some jurisdictions. It could be that who the plaintiff is has become public knowledge outside of this forum, but it is also possible that the two parties are still trying to negotiate a settlement in private.
05-13-2019, 09:28 AM   #13
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QuoteOriginally posted by rangercarp Quote
Obviously none, but neither does any current Pentax camera CURRENTLY in production. However, I do recall a Ricoh patent for some sort of a hybrid viewfinder. It is possible that Nikon is working on something similar and is worried about infringing on Ricoh's patent. I realize this is wishful thinking, and I intended to frame it as such. "Wouldn't it be nice if it is a Ricoh patent they are worried about? If it is, what would it be?"

That being said, your guess of Sony's IBIS sounds plausible. At the same time, it would seem to me like it could be something that is still under development and not in any current cameras. The wording suggests they do not yet know if they are infringing on someone's patent. This could be because the product is incomplete and they are still trying to work around a patent. On the the other hand, maybe Sony sued Nikon for coping their IBIS system and they are waiting on a judgment that may result in paying royalties to Sony.


It is a cryptic statement that lends itself to speculation.
QuoteOriginally posted by Nikon Statement:
there is a danger that the production and/or sale of a product will be suspended
This suggests that it is about a product currently in production and on sale. So it is not hybrid VF tech patents they are worrying about.
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