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Nikon expects biggest loss in 11 years, stock down

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Nikon stock price

  • Nikon reproted a 62.8% dive in net profit to 28.06 billion yen in fiscal 2008. The net loss will total 17 billion yen ($176 million) in the 12 months ending next March (source)
  • Nikon is still aggressively planing to increase its market share in the Indian market to 45% by 2010 (source)
  • Sales of Nikon lenses shot up by 9% (source)
  • Nikon stock is down more than 8% today (source)
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  • nuser

    The lens sale spike is artificial, since they’ve raised prices and everybody tried to get them before the price increase.
    Now that everybody got them, sales are gonna go down significantly.
    And the D3x pricing is outrageous comparing to Canon, who didn’t raise their prices even for lenses.

  • Jim

    Sounds like they need to release a new product(s) to increase sales. Maybe a successor to the D300? I wonder if that would generate any consumer interest?

  • http://www.dispatchesfromkansas.com Tom Parker

    Or they could lower the cost of some of their finest lenses, even if only for a short while. Customers LOVE sales and will spend their little hearts out given the opportunity, and if they smell a bargain. Short-lived bargains really bring out the feeding frenzy. I know this from experience and also from lust over the 70-200 VR. Even if their profits were less per lens, they’d more than make up for it by mass sales.

  • Willis

    The problem, Tom, is that they have already taken a big hit on their margins. Sales were actually up over the same period last year (even with the price increases) and yet profits are down.

    Nikon has taken a hunker down approach and opted to scale back production. For us that means wait times for those fancy lenses and more out of stock situations at retailers. Not good for us, but I think its the smart move.

    The good news is that R&D spending isn’t taking a hit, so we can still get cool new products.

  • AZ

    I’m thinking about the 45% market share in india, it would be a huge achievement, but I doubt Nikon will be able to get as much, as they overslept a lot. I was working in india in 2001 and at that point of time Nikon wasn’t even officially on that market. Last year when I was there once again on a trip, Nikon was visible, but the price tag was very heavy for people where average income is so low. So I guess that if they want to get 45% market share they need to introduce some inexpensive products – would love to see some cheap d300 version.

  • Hendie
    • http://jmcs.deviantart.com JMCS

      :rollseyes:

    • Stephen

      That thread is not why Nikon stocks are down. Most of that was already developed or just pieces of already existing products.

      • BrianO

        He was joking.

  • ColinH

    Just checked my supplier’s website – 80 lens listed – 32 are “call for availability”, i.e., don’t know – 50% of remainder are 2-4 weeks. Call it “managing your market”, but Nikon is risking their customers walking away.

    • Zoetmb

      That’s your supplier. While there always some lenses out of stock, when I last checked on March 6th, BH had only 8 Nikon lenses out of stock out of the 56 current Nikon lenses. And some of those 8 were available as imports.

  • Visitor

    What a difference a few weeks makes. The following nonsense was apparently quoted by Nikon late April 2009 (posted here in April):
    “Under this environment, we carried out the group wide production adjustment and enhanced our sales promotion activities. As a result of these measures, our Imaging business is expected to achieve higher revenue and profit than our prospects, and our consolidated results are expected to exceed our last forecast.”

    Meanwhile Sony has lost over $1 Billion:
    http://news.yahoo.com/s/ap/20090514/ap_on_bi_ge/as_japan_earns_sony

    But then Sony has deep enough pockets to survive. Maybe we’ll have a bidding war between Canon and Sony over buying Nikon’s remaining imaging DSLR /Lens based assets in another year or so. If consumers save their money and wait another year or so, I imagine that there might more than a few Nikon closeout bargains. Now might it end up becoming Sonykon or Canonkon?

    • Zoetmb

      >>>our Imaging business is expected to achieve higher revenue and profit than our prospects, and our consolidated results are expected to exceed our last forecast.”

      And that’s exactly what they did. They did beat their prior (last) forecast. See my post below for the specifics.

  • mikko

    Well put D700 price to 1500$ and I will come to rescue ;)

  • Zoetmb

    When analyzing Nikon’s photo business, you have to separate the imaging business from Nikon’s other businesses, especially from the stepper business, which is doing extremely poorly.

    Considering the economy, Nikon’s photo business is doing quite well: they beat the previous year’s units by 11% for DSLRs, 21% for compact cameras and 9% for lenses. Revenue was up 1.8%, but earnings were down 52%. However, Nikon expected to be negative 2.8% in revenue and 58% in earnings even as of the most recent estimate, so they beat those estimates handily.

    One of the biggest problems is still the exchange rates. The exchanged rate averaged for the 2009 fiscal year (ending March 09) at 101 yen to the dollar. This compares with over 120 yen to the dollar back in the 2007 fiscal year. They expect 2010 to come in at 95 yen to the dollar (it’s currently 95.7346), but a month ago it was 98.6.

    Since it’s not revenue that’s the problem, but earnings, Nikon cannot afford to lose margin to gain market share. Therefore, you’re not going to see big discounting — if anything, you might see more price increases.

    In terms of market share as compared to CIPA shipments, Nikon has a 37.5% share of DSLRs, 10% of compact cameras and 32.9% of lenses. But their lenses sold per body are still below industry averages: 1.42 vs 1.62 for CIPA shipments during the same period.

    One hopeful sign is that CIPA shipments are improving: In January 09, DSLR shipments were 42.5% behind previous year, in February they were 30.5% behind last year and in March they were “only” 20.2% behind last year. At the current rate, shipments could match last year by May or June.

  • eh??

    it’s telling everyone to buy what they want SOON before they violently increase the prices up to, what, 50%. better get it soon before it happens rather than waiting for an accident to happen.

  • steve

    Please fix the typo in the title of the post – biggest.

    Prices have already been inching up. Which is good for my resale, but bad for me getting new gear.

  • funny

    hey nikon wanna sell more:

    STOP RAISING PRICES.

  • Obviously

    What do you expect? Nikon always keeps their newly design bodies last minute as they make consumers wait. Honestly, people can’t wait. Many want newly improve gadgets because they want to be in sequence with the latest technologies. Therefore, people will start to seek new and different alternatives by consuming other brands in the market. FOR EXAMPLE, we all know that you will be releasing a new body that for sure will be a successor to the D300. SO STOP DENYING IT AND LET IT OUT ALREADY. I have the money, patience not so much. Don’t know how much longer i can wait.

  • Michael

    Just keep raising prices in a recession and they can look forward to a new record next year. For example, I need to invest in some new equipment for interior photography such as a FX body to take advantage of the release of the new PC-E lenses, but price increase on the 24mm PC-E from A$2600 to A$3300 and a similar increase on the D700 makes it uneconomical.

  • Maximus

    I agree with ‘Obviously’. Especially if Nikon are going through a tough time, the best bet would be to announce the D400′s release date. That way, it’d start the hype and those who were going to move over to Canon, will get back in line (assuming they like the D300 segment).

    As far as price increases go, I believe it to be a bad step. Here in South Africa, VW increased their vehicle prices by 30%. A budget speech recently given, stated that new vehicle sales have now dropped by 35%…

    It should be rather simple: I sell hot dogs for $1.50. The roll costs 10c and the sausage 35c. To cook and prepare the hot dog, including sauces, costs a further 30c. The total cost of production therefore is: 75c. Profit is therefore also 75c. I sell 200 hot dogs a day and thus I make $150.00 profit. If the cost of production rises to $1, and I continue selling at $1.50, assuming 200 customers continue buying, my daily profit falls to $100.00…

    Now there are various things one can do to solve this. Either find cheaper goods (sausages etc), which may or may not be of lesser quality (might not taste as nice, which would drive away customers) or I could increase my prices to make the same profit. A third option is to lay-off a worker. But lets say I increase prices to $1.75. Profit would be $150 again right? Not necessarily. While the theoretical model works, in reality customers would be annoyed that they now have to pay more for the same thing. Chances are (such as in the global crunch) that their wages would have dropped, or at least not be worth as much as they did prior to the global crisis, and they were actually hoping hot dog prices would come down 15c. Instead they are met with an increase of 15c, (which almost makes it feel like a 30c price increase) and as a result, 100 people stop buying hot dogs. Profit is now only $75. So by increasing the price, I’ve actually halved my profit.

    Realistically, even if I don’t increase my prices while people’s wages drop, I’m likely to have fewer customers than my original 200. Let’s say 150 customers buy hot dogs at $1.50. My profit is still $75.

    However if I decided to actually drop my prices by 15c to $1.35 per hot dog, it becomes affordable again to the 200 customers, as well as an option for customers that usually bought lunch for $2 and up, but who are now feeling the crunch too. Instead, 300 people buy hot dogs that day, and as a result, I make $105 profit ($30 more than I would have if I increased prices, or kept them the same). Even if only 250 customers bought hot dogs, I’d still be making more money ($87.50)…

    Indeed it is true to say that no matter how you look at it, profits are down, but the important thing to keep an eye on is public perception of your product. Companies (like coca-cola for example) spend millions of dollars on advertising just to keep that brand awareness and public perception going. By decreasing your prices, customers don’t feel ripped off and are far more likely to support your product in the interim and the future. Even if I dropped my prices further and made $75 profit, it’s the same profit I would have made had I increased my prices. At the end of the day, increases will have a long-term effect on my product as customers perceive me to be greedy. It will ultimately force them to find alternate value-for-money (which is what we all look for).

    As it is, my camera and lenses were stolen, and I now have to re-purchase into a brand and I find myself looking to purchase an F2.8 lens. Here in South Africa, the 24-70mm F2.8 Canon lens is R14,000, and the Nikon 24-70mm F2.8 is R19,000. At R5000 ($585, which may not seem that much in the US, but in SA it’s a big whack) price difference, I have to admit that I feel like a customer who’s hot dog just got more expensive, and Canon is suddenly seeming rather tasty…

  • shivas

    HOW???

    I have spent nearly $2k this year, that should’ve sustained the bastards!!

    My defunct D200 is brand spanking new – I want a D400 to compliment it, come on Nikon!!

  • James

    Nikon increased the price a few month ago, don’ t except me to buy any new gear from them

  • Joe

    If they increase their price AGAIN, i’ll jump off the boat and go to canon.

  • Anonymous
  • http://www.stark-arts.com Stark-Arts

    Canon has recently raised their prices as well. The biggest problem to me is the cycle of people can’t buy what the stores don’t have. For Canon (who have even more lenses out of stock at B/H than Nikon) and Nikon to continually not have products in stock that customers want and then turn around and say profits/sales are down seems silly….I know that no one wants a glut on the market that forces prices down but to have no D90 bodies in stock at B/H for 3 weeks…no 24-70′s in stock for a month…etc etc would kind of lead to reduction in sales…right?

  • Joe

    ah… the stock market… everyone is loosing money there. Look at circuit city ? look at Ritz camera ? the economy – at least in the US it is in the commode, $1000+ dollar cameras aren’t going to sell like they did before the economy tanked and viola – a glut of $599.00 D200′s to sell off at best buy (and Nikon also has to honor those w/a one yr warranty – ouch).

    I suspect that is why the D300 is rumored to soon be discontinued – truly sad. Nikon can’t afford to have another D200 fire sale – perhaps they got burned by circuit city and ritz ? I did snatch up some nikon gear from CC prior to them going kaput but I suspect that what was left over both there and at ritz may have hurt Nikon’s camera sales/stock.

    So in an effort to keep their prices up during this economic downturn maybe Nikon is trying to make their popular gear harder to get (D300) that would also bolster the price of the D400 and whatever other new models they are planning…

    My “stock advice”: WAIT.

    We haven’t seen the bottom yet in the economy. Buy low, sell high – I’d bet Nikon is doing that now – and so will I. Suspect that we will see more “D200′ish bargains” in the not too distant future. If not, make the best of what you have.

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