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Nikon forecasts a record annual loss

Nikon posted its quarterly results today:

  • Quarterly Loss: 4 billion yen in the first quarter ended June 30 (compared to 18 billion yen profit a year ago).
  • Net loss for 2010 (estimate): 28 billion yen ($295 million)
  • Nikon raised its revenue by 4% to 710 billion yen

SourceNikon.com financial materials

Coming up next: more Nikon patents.

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  • Dat Ng

    Dat was here first hiihi :D

  • Anonymous

    cool story hansel

  • bandwagon

    It has begun…oh, wait…wrong story.

  • JM

    This is probably because they aren’t including manual controls for video. :D

  • http://photography.londoneater.com Kang/LondonEater

    That bottomline will soon bounce back with D700x and the 24f1.4 85mmf1.4 AFS updates …… and can we ressurect the thread about a digital manual equivalent of the FM2, with a FF sensor? Nikon DM with D3 sensor? I would so buy that.

    • steve

      If anything, it might keep a D700x and those primes from being released. Nikon makes most of their money in the low-end consumer market. I’d think if times were tough, that’s where they would focus. Might be a big reason we saw a new 18-200 – their best selling lens.

      • a different steve

        RE: “Nikon makes most of their money in the low-end consumer market.”

        Really? I don’t have a reason not to believe you, but I hear some people say just the opposite. I would like to see hard and fast numbers either way. Anyone have some?

        • Rafa

          For me the cause is clear. The people on low end market want:

          – FF sensor camera body at affordable price. 350-500€.
          – Dynamic range is poor yet when comparing with 35mm film. People is wainting to waste its 500€ to buy its camera.

          So, Nikon, raised down your business expectations. You only sell cameras (a luxury article) and the people answer you reasonably.

          Meanwhile, people stay with it SLR DX 6mpx as even top end D3X (6.000€) doesn’t compete with film regarding dynamic range.

          Cheers,

  • Joe

    Maybe it has something to do with a major price increase during a time of global economic downturn

    • STJ

      Maybe that has to do with a really low US dollar rather than higher Nikon prices. In Europe we have constant high prices :-)

      • Nikkorian

        It’s true though that European prices went up, when Dollar and Pound went down. And now, with a stabilized Dollar, they haven’t relaxed. So in the end, there WAS a price increase. And then, look at the price of the D300s. That’s a huge premium compared to D300, a mere 100 Euros difference to D700. That also marks the price increase.

        This really keeps people from buying — it`s psychology. Prices fall and at some point you think you’re getting a bargain. But increasing prices will do the opposite.

      • Stephen

        This argument is a failed and false one. First, most major international companies do business throughout the world and have major business components in every country. As they do business in those countries they collect monies from that country. It is not as if they are then converting those back into Yen. It’s not going to happen that way. They will pay their bills there in those currencies. They will also hold onto those currencies with the realization that the exchange rate will change. Frankly, holding on to US bills is not a bad idea as it is generally on the up and up.

        What they have done with the price increase is insane. It would be better for them to have a slimmer margin and have an increased bottom line. Anyway, enough of the economic discussion.

        • STJ

          “US bills is not a bad idea as it is generally on the up and up”… :-)
          Right Stephen. I live in Switzerland and for me the US dollar is down down down – and seems to continue doing so…. I guess you’re American as you write “enough of the economic discussion.” That really is funny :-) If I wasn’t paid in dollars at the moment… :-(

          And no matter how you turn it around the Nikon cameras are not produced in USA – some cash has to flow back into Yen. Ever thought about why Americans are always crying about not being able getting lenses? I don’t have that problem here in Switzerland – everything is available.. You just have to pay more – Europeans are apparently better customers for Nikon – we pay! We all want more for less – hey I want a Porche but guess what – since 1985 they increased the prices – bad bad bad Porche ;-)

          To Nikkorian: In Germany, France and most other european countries besides the UK the Nikon prices have been more or less stable (that is – going up AND down).

          • Stephen

            Actually, when compared to the Yen, the US dollar is doing very well. After some careful investigation it is at levels comparable to 2006. As for flow back into a Yen, very little would actually be needed. The only required flow back is for labor costs and any initial capital investments. Most basic resources would could easily be purchased using the USD.

            As for availability of lenses, personally, I’ve never had this problem. In the past I have been able to purchase lenses locally without any wait, and only rarely have run into the back order issue online. Frankly, I would say the back order issue has more to do with the size of the clientele than to do with price paid for equipment. Oh and I usually only pay a small amount more for lenses locally.

            Also, if we further look at the cost of developing a lens we find very little in the way of initial capital investments. This is usually the thing that drives the price of any product up. Yes, there is R and D. It is a well understood cost, but they are not rebuilding factories when they change products. Likely, they don’t even need to change equipment. Just the programmed motions of the polishers and grinders and the like. Most of the other work is hand assembly. So prices of lenses should be going down, or remaining somewhat stable.

            Anyway, I kind of take the Lexus example here. Lexus came out when spending a fortune on luxury cars was not the norm. So they sold the thing at a loss, and probably a big one. Now they sell the thing for a huge profit, but they have the market share to keep command it. Right now, when a lot of people are struggling to make ends meet is not the time to increase prices. Frankly, it keeps looking more and more attractive to switch to Sony. I would be happy with Zeiss glass. I’ll stick with Nikon, but the price increases have limited my purchases. I don’t even spend nearly the same amount as I did. I just don’t see the bang for the buck.

    • Mike

      economic downturn is just for americans.

  • Dan

    This was to be expected. What does this mean for us? Well, fewer product releases and higher prices—because they have to make up their margins somewhere. We’re already seeing this with the $2,400 VRII 70-200mm, which would have probably been priced around $2,100-$2,200 if it weren’t for the global economic downturn. I expect a lot more focus in their product portfolio over the next 1-3 years, and higher price points for the products with higher demand. Essentially, fewer products doing more for their bottom line. Non-performing product lines will be eliminated or scaled back, and R&D will more closely align with long-term sales forecast. While wild speculation on my part, I am guessing that Nikon will merge with another major camera manufacturer within the next 1-3 years (although probably not Canon). I think this is inevitable.

    • dr4gon

      well, if they’re smart, they would be reducing prices (like Canon and Sony have in the past and present, some temporary).

      • STJ

        If they were smart Nikon would not decrease quality (like some other brands)… is another opinion….

    • Zograf

      Nikon is one of the major if not the biggest nowadays provider of lithography equipment to the semiconductor industry. That’s where their main losses are. Semiconductor FABs in Taiwan work at 40% capacity, it is scary. Nikon cannot diversify like Sony/Canon, their major businesses are industrial lithography equipment, each costing $20+ million, and prosumer photography equipment we all are more familiar with.

  • NikoRyan

    Well, it’s not my fault. I had a wallet-draining year of Nikon purchase year. I bought a D300, MBD-10 grip, 24-70mm f/2.8, 10.5mm fisheye, 50mm f1.4, and have the new 70-200 f/2.8 on my radar.

    • Niloy

      Why didn’t you go fullframe…. :(

  • Bastiaan

    Weird, their revenue increased but still they make a loss! Why? Only other factor is increased costs, but that seems weird in this climate of reducing prices for just about everything (labor, supplies, etc)

  • Anonymous

    The dollar has tanked this year, so their margins are way down. The dollars they are bringing home are worth less. That the real story behind the price increases. Revenues were up so they are selling a lot more – they need a lot of additional sales to show top line growth even after the currency exchange. But prices have to go up to cover costs and show some profit back home. And most experts expect the dollar to continue falling with all the new debt the US is issuing.

    • STJ

      I agree. The cost of Nikon products in Europe have been more or less stable the last years. However the US dollar has gone down down down. It’s simple – when a currency devaluates the price for foreign products go up, but it gets similary cheap to by US products – hence the export should go up. Ok – this might be a bit too simplified, but bashing Nikon for higher prices during a recession seems slightly unthoughtful – bash the crappy banks instead….

      • Mike

        Absolutely agree. But I have a question about the cheap Nikon stuff, that you can buy online at adorama …etc.

        How come that the products (originally wrapped in Nikon) missing warranty papers. what is this for shadow business? Instead of Nikon warranty you can purchase 5 years extended Adorama. Rubbish. They have serial numbers on products, but no trace about its customers.

  • ryan

    Wait… they are predicting losses, already have huge loses, yet their raised their revenue? i must be so NOT business savvy.

  • James

    I have supported Nikon in 2008/2009 upgrading all my lenses getting those expensive lenses.

  • jettblack

    Surely a point and shoot with a built in projector should save them. Just in time!

  • Just A Thought

    Sony and Canon have deep enough pockets to survive. The Japanese economy will not improve till around 2013. Nikon does not have the deep pockets of Sony or Canon, nor the diversification needed to survive.

    Instead of dropping prices to increase sales and retain market share, Nikon is doing the opposite. Look at the Sony flagship A900 – has dropped in price to under $2700 while NIkon’s equivalent D3X is around $9,000 (ok it has a battery grip built in – just add in Sony grip price to A900). Sony will be releasing FF A850 shortly apparently rumored for around $2,000.

    When times are good you can raise prices. When times turn bad, then drop prices to retain customers, sales and market share. That’s why Sony and Canon will survive and will end up buying up Nikon’s Camera divisions. Will it be Sonykon or Canikon? My guess is Sony would benefit more than Canon and that is why Canon will fight tooth and nail to try and prevent Sony from acquiring Nikon’s camera divisions and computerized lens designs and designers.

    35mm sized Camera manufacturers:
    Yashica = gone. Minolta = gone, Contax = gone, Konica = gone, Fulifilm only P&S left. Kodak only P&S left. (even add in MF Bronica – you could get 35mm backs if memory serves me). Next to go will be Leica’s camera divisions (Sony or Canon may acquire) and then Nikon’s camera divisions. That should leave Sony, Canon and Pentax by 2013-2014 when things have turned around.

    • John C

      I think it is a little premature to be writing Nikon’s obituary. Instead of random musings, let’s actually look at Nikon’s financial statements. Yes, they lost 3.9B Yen. But 2.1B of that was from foreign exchange losses and another 1.3B was a one time restructuring charge. They also took some currency hedges for future protection against exchange rate changes, so without those two charges, they would actually be profitable. If you look at their cash flow statement (which really tells the story of whether or not a company is in real danger), they generates 6.5B Yes from ongoing operations – so they actually added cash to their accounts from operations. After you add in their 7B in plant expansion and 17B in bond redemptions, their cash position rose from 79B to 93B for the quarter. Even if that 4B loss were real operating losses (and they weren’t) and even if they continued to lose real money at that same record setting level, they have a cash in the bank today to keep going though 2015. Any way you slice it, Nikon’s not in any danger of folding any time soon.

      • Chris Lilley

        John C, thanks for adding actual facts and sensible analysis to the discussion, both sorely missing from the commentary so far.

    • STJ

      Hi “Just A Thought” – I just had a thought… when you write “When times turn bad” – you should write: when times turn bad in my country… Not everywhere is like home….

      I agree with John C. – Nikon isn’t going to die at all – they will have the reputation of being the best when the “global” crisis is gone and Sony is known for producing low cost high megapixel count cameras…. To each his/her taste – go Sony if you want what Sony produces!

  • Ryan

    nikon isn’t going anywhere…

  • Ryan

    Hey, i will save the company guys, im buying about 6,000+ dollars of their stuff this next month, so there!

  • Mike again

    so this is the “groundbreaking news” I was waiting for!

    @ “just a thought”
    You think Pentax will survive?
    Maybe it’s time to rethink my strategy, I was going to pick up a D700 today + 70-200/F2.8 + accessories and…

  • Elkwatcher

    Here is real problem. In a camera club trip this past weekend, I was in a van with 5 other Nikon shooters. Current cameras ranged from D2Xs to D700 and 3 D300.
    In discussion of new products there was ZERO interest in D300s, video was of no value to group, or no one wanted to go to the expense of computer software or hardware to do it right. There was ZERO interest in the 70-200 lens because of $800 price deference. Zero interest in D3000 level camera and only passing interest for 18-200 at $800+. In the van was probably $25000 of Nikon cameras and lenses and no interest in spending on new products. So problem is that Nikon has lost touch with customers who really spend money. If they screw up D700 with the video add on they will have lost even more sales especially if the discontinue still only models!

    • Jon Paul

      But even with smaller margins on the consumer-oriented equipment, they can actually make more money because the market is bigger. I think they’re being conservative to avoid taking too big a hit from the recession, which may or may not turn out to be a mistake. Let’s see what Nikon does in the next year for the pros before criticizing–the D700 is only a year old, after all.

    • Mike

      Come on the video would be great. Canon has it in full 1080p.
      With the rest I agree with you. Nikon is to closed. They don’t listen customers. No real service. You pay a lot of money and you get one year Warranty? In some Europe states you get 2 years on shoes.

      I wish nikon would be open as APPLE IS. I now speculating as my camera is 5 years old, but I hate when companies pushing people.

    • STJ

      The van – man has spoken – “Nikon will have a hard time if they don’t make my day…” Funny funny funny! :-)

  • 芽依

    too much economics talk for my small head , i say bring those f1.2-1.4 primes !

  • Mike

    Well I believe so. Nikon earn bad reputation. Service is quite bad, they don’t have own store, only using resellers. Their marketing is not so great. Announcing a New camera which you can not buy. Lenses you get in November “if you are lucky”. People are shaking to get the new D300s, but you can’t. What is the point of that. Now couple days past when I read the review, I would order straight away, but now, hmm I wait ;)

    One more thing about reputation. They started to make the lenses more expensive, and couple months ago were telling everyone, Buy it now because later it will be more expensive. I’m sorry I’m not playing this game. Wake UP NIKON!!!

  • Davey

    Nikon should let me advertise for them! I’ve been taking a lot of photos since I’m full-time, so I decided to check how close I was to the estimated 150,000 shutter life of the Nikon D300. The last picture I took today, 181,588! They are built strong! I’ve even taken my camera in pouring rain, snow, sandy beaches, across the world, wacked it some, and scorching sun (warping the rubber grip on my lens). Nikon should give me a free camera for advertising :D

  • Almost Gone

    Keep producing cameras I don’t want with features I don’t need. While I was waiting I got a canon sd990is. at this point I’m considering changing platform altogether. No backwards compatiblity for affordable Dslrs equals what’s the point.

  • http://thomaslesterphotography.com Thomas

    Well… with the combination of the bad economy and not releasing the gear the public wants (i..e fast primes), what do you expect.

    • STJ

      The “public” wants fast primes? Hmm….

  • Michael Lynch

    Nikon – quick to increase prices in Australia when the dollar tanked, slow to drop prices as the dollar has regained strength. I don’t see any value in Nikon products so have not bought a thing since late 07. I have bought heaps of auxillary equipment though from pro ball heads (RRS), large rolling cases (lowepro) and lighting equipment etc but still holding off the 24mm PC-E until it returns to approx $2700 rather than $3300 and can’t see a reason to upgrade my D2Xs.

  • Zoetmb

    Once again, people are comparing apples and oranges. While if Nikon as a whole was completely unhealthy, that would be of concern, you really have to primarily look at just the imaging business.

    Nikon just raised their full year forecast, but is still expecting FY2010 (ending March 2010) to come in down 14.5% in revenue and 12.6% in earnings, but that still leaves a 6.9% margin, slightly better than last year’s 6.7%. But Nikon always underestimates, and they should come in higher.

    For Q1, they came in down 17.9% in revenue and 45.9% in earnings. That is indeed a big earnings drop, but margin improved for the 1st quarter to 9.2%.

    In unit terms, they were down 2.3% in DSLRs, 1.6% in lenses and 2.3% in point-and shoots, but they’re expecting to be up for the year: up 0.9% for DSLRs, 0.6% for lenses and 1.6% for point and shoots. If they make the projected 3.45 million DSLR units, 4.9 million lenses and 10.5 million P&S units, that will be a record. Unfortunately, they’re making a lot less money selling all those units and with the price increases, you really have to wonder where all the expenses are.

    But considering the economy still sucks, selling a record number of units is pretty good.

  • Dweeb

    Rumor has it that the pirate stole it.

  • Barry

    Hate to say it but with the economy as it is, and their price increases, a person entering the market might be hard pressed to by Nikon over Canon.

  • Jack

    Man, it sucks. If Nikon doesn’t release an FX camera with 20+MP I will have to buy a Canon 5D mark 2 and a few lenses until Nikon does, since some of my agencies are now requiring a high MP camera body.

    • Jack

      I should have said other than a D3X. I’m not spending $8000 on a camera body.

      • alex

        if you can’t afford a d3x you don’t need it.

        • Jack

          I never said I couldn’t afford it. I certainly can, but I think it’s foolish to spend that much money on a camera body that will lose most of its value in 5 years or so. I’d rather buy lenses. My agency has actually recommended I switch to Canon at this point.

  • alex

    “The company, also the world’s second-largest maker of single-lens reflex cameras”

    wasn’t nikon no.1 since 2007?

  • Joe

    Nikon RAISED prices on all their equipment right smack in the middle of the recession. It does not take a genius to figure out that if they wanted to INCREASE SALES they should have LOWERED PRICES. Instead they discouraged customers from making purchases!

  • David Johnson

    Nikon will weather this storm you can bet. My own company is doing what we have to to survive. Nikon does need to respond to the Canon Mark II D5. Right now I am not sure the D300s will be anywhere near the success that the D300 was. D700 prices should drop. Adding video to a D700 might be a poor seller in reality. I don’t own a D700 but would like one. I am looking at the D300s but cost is an issue. Can I afford it, yes, and can I jusitfy it…..not sure. The D700 is a very attractive camera from the outside FX looking in……but video which might be now essential in DX….seems like far less of a feature on FX. Comment: . The Nikon Rumors economic discussion is good enough that I saved it………there has been some classically good issues here I think…….and some statements I take as fact….that I did not know! High credit to Nikon Rumors and the contributors of these comments.

    • http://nikonrumors.com/ [NR] admin

      I would say high credit to NR readers – especially for the patents – I got a lot of emails from people offering help and explanations in the patents interpretation. A new post on the patents is coming up soon.

  • David Johnson

    I would like to hear what NR readers think about the Coolpix 1000 with the projector capability. Myself I do NOT want to use a projection tool mixed with image capture!
    I use Apple computers to do iPhoto slideshows to show friends and clients our work. I then use either Apple Cinema of LED HDTV to show the images (or just the iPhoto program on a Mac Book Pro…….I have tried projectors and find they are not good enough to satisfy my eye within what I feel I can pay. So the Coolpix 1000 is to me a very odd duck. However I watch people show others images on 3″ LCD camera screens almost everyday. I myself try to use the LCD to get the right exposure setting or reshoot immediately.

  • http://nacemotley.com brad

    I like Nikon – a lot. I’ve been through the d200, d300, 2 17-55s, 2 sb800s, and 1 70-200 (all 2.8). With Nikon raising their rates for virtually everything (except the d300) before and during the recession, what are they to expect? Where are the incentives for me to run out and buy the newish d700 or d700x/s when it comes out… Where are the incentives to run out and buy the new 24-70 or 70-200? I’d like Nikon to incentivize my soon-to-be purchases like they did in years past. If they did, I’d buy all new stuff since I’ve already had one outfit stolen and managed to sink the new outfit in a lake.

  • Cesar

    How on earth is this possible at all?

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