Originally posted by GlassJunkie The speculation herein seems stronger than the Enquirer or Star (US Tabloids) available at fine grocers, Nationwide...
---------- Post added 09-06-14 at 04:43 PM ----------
The return on even $70mm (over 5 years on the lenses, 3 best on the K-FF) at LIBOR plus 3 is well over $90mm before you make a penny. at 35% gross margin (generous on this type of equipment) you have to sell $290mm of K-FF and lenses. If the average buyer buys 2 zooms at 1500 each- 40% retailer, that's $900x.35 or $315 each buyer. Add a K-FF body at $3000-40% is $1800 x.35 or $630/buyer.... So we have $945 net op margin on each one and you have to sell 95,000 "sets" to break even. If Ricoh seeks equity rates of return (IRR is usually 30% minimum in Japanese Mfg) on the $90mm sunk, then you need ~120,000 sets (minus margin made on extra goodies/ access).... Best case 110,000 sets. If you use my numbers twice as bad.....
Based on your thinking/numbers, the original Pentax Imaging purchase has zero hope of breaking even
Why would they need to think about LIBOR numbers if it's self-financed? That's something Pentax-standalone would have had to worry about - not a Ricoh. Plus, it's almost assuredly closer to $30-40 million above and beyond the cost of aps-c and other operations rather than $70m.
If Pentax sells 10% of the volume of Nikon's D800 alone, they sell 36,000 bodies the first year. At initial MSRP of $3K Nikon reportedly made at least $1000/body profit on the D800 (source: thogan,) If Pentax makes even half that margin, they're looking at $18 Million profit in the first year on the body alone. Then come the lenses, which usually can have even greater margins.
You should also factor in the cost of doing nothing, of watching aps-c DSLR volumes shrinking and K-mount lens volume along with it. (To be fair also factor in the opportunity cost of not going whole-hog into MILC, which they might be thinking about.)
Basically it comes down to:
1) Does Pentax/Ricoh want to stick with the K-mount business, do they want to be selling K-mount products 10 years from now?
2) How does Pentax keep selling K-mount products at respectable margins when their volume end (entry) is being eaten by MILC and their margin-rich upper-end is being eaten by entry-level FF? Remember, they survived in the film days without these two disruptions, there was no "FF" or MILC alternatives - 135mm bodies held a very strong position with lower products a joke and upper-end being $$ medium format.
If the answer to #1 is "no" then #2 doesn't apply.