Olympus hid up to $1.7 billion

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A short update about the Olympus fee scandal. As you know it’s a crucial month for Olympus. They have to release their financial report within December 14 otherwise they will be delisted from the Tokyo exchange. And tomorrow the the investigative panel will release their report about the Olympus fee scandal. But first bit of info are already coming out. Reuters reports: “An investigative panel has found Japan’s disgraced Olympus Corp hid up to $1.67 billion in losses from its investors, but is likely to say there is no evidence of involvement by organized crime in the cover-up, a source said Monday.

As I said before, I am crossing the fingers for Olympus. Let’s hope 2012 can be the year where Olympus can restart with new energy and clear ideas from the management!

 

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  • frank

    The good thing is that the losses seem to have been “booked” under “consultancy fees”. So the balance of the company seems to reflect the actual status, it is no poorer or richer than it seemed.

    • babbit

      It looks like the losses were not booked at all. The consultancy fees that they booked are a separate set of losses unrelated to the $1.7 Billion from this report. Even for the booked losses, it still affects the balance sheet because you are supposed to get assets or value in return for costs, and the consultancy fee did not result in any services rendered.

  • GreyOwl

    Agreed.

  • Sad day. I feel for my friends at Olmpus America. It must be dreadful wondering what is going to happen in the coming months.

  • Let’s just hope they can maintain operations and provide support for existing customers who are relying on spare parts, repairs and general warranty service.

    I will hold back with further Olympus purchases until it’s certain they company will survive.

  • EvoltPEN

    How does warranty work if Olympus is going to be taken over or it closes it’s camera division, I just bought PEN with 2 years warranty.

    I hope this company will survive and continue good job on mirrorless and mirror cameras. Times are not going to be easy and I affraid that Olympus might go down because of this scandal. I guess Woodford did what he was supposed to do in his position. Timing wasn’t best for this kind of scandal, but this kind of things just have to be figure out.

  • Ren Mockwell

    Sincerily I´m dissapointed at Olympus with this whole thing and I really hope they are bought by Panasonic.

    I am thankful though I didn’t put my money on the E-System phewww… because that’s the one sector that is going to get axed because (most likely) they will only keep profitable products and discard the rest (they will keep micro 4/3 for sure if they don’t sell the image division).

    But in any case I have my EP3 and EP2 with adapters so if they tank I can survive on 3rd party glass without a hitch hehehe 😉

    • Ren Mockwell

      Good job on mirror cameras??? which one? Sony has better chances with their technology than Oly with the E-System which has reached its max potential for the sensor size they use, the 4/3 sensor makes sense in mirrorless cameras but it doesn’t makes any sense in SLR cameras at all.

      • Martin

        Hey Sony troll, why do you adopt the nicks of the people you respond to? I guess it’s a part of your trolling campaign, right?

        • Thomas

          That was pretty lame.

  • lnqe-M

    The most by lose to Olympus is over 20 year old, and the is before i buying all my Olympus camera and lens. 😀

    • flash

      Isn’t that the time they did not push forward their OM camera line to a good auto focus standard? Liked that OM4 and OM2; they just were about perfect for what me and what I was shooting at the time. Wish I still had my 4 and a bought OM3.

  • Bizzarrini

    They are in need of some good news I guess. How about that 12-60mm? Any news? According to previous reports, it should be announced this week, right admin? And how about that ‘fuji-styled’ camera?

  • pbrooks100

    If the camera division is sold, let’s hope it will be to Canon. This would give Canon an instant competitor to the Sony / Nikon mirrorless products and would buy a lot of loyalty with Olympus owners by protecting their investment.

    • @pbrooks100
      so not funny, anyways Olympus will survive, rebuild and prosper (hopefully without you know who):D

    • Martin

      Interesting idea.. But, Canon has very probably its mirrorless system already in development (at least), and certainly it’s not based on the 43 sensor. So even though they could use Oly patents and technologies if that happened, it wouldn’t be a very good result for m43 users…
      IMO the best vendee from our point of view would be Panasonic.

      • Karl

        “Olympus will survive, rebuild and prosper”

        Probably, but the question is whether it will do so with its struggling camera division.

  • Jim

    I do hope Oly can keep with 43/m43 I know they will phase out 43 but still if their camera dept. was to be shrunk these are the 2 things I would like to see stay alive (even if 43 is just on life suport). the compact and SZs can crumble for all I care – early on they made some very inovative SZ but now they are superceeded, and the compacts are no good!

    But long live m4/3 and I pray a PDAF adaptor for the 4/3 glass – its so good I would hate to see it finnished!

  • I guess we will just have to wait and see what will happen to Olympus this Dec 14. I really hope Olympus can turn things around.

  • With revenue around $10-11 billions, $1.67 billion is pretty hefty sum… At least it seems to me.

    I’m on the limit of my understanding in modern financial systems. Can anybody elaborate in laymen terms how severe or not the amount is?

    IIRC, Oly had also some cache reserves. Or not?

    • lnqe-M

      Olympus drive shop in 20 year, by a lose on $ 1.670 billion!
      The is only a probleme for Olympus share premium, not for a photographer so use Olympus camera, but Olympus need cleaning now.

  • One thing to remember: this is an Olympus-appointed investigation panel.

    Something still smells wrong to me. Time Value of Money tells us that US$1.7 billion in 2011 is actually something akin to US$1 billion in 1990. And that would be without interest or conversion fluctuation, just inflation. We need more detail. Far more detail.

    • Karl

      The company and its investigators understand that contemporaneous criminal investigations are beginning to take place in Japan as well as in England, so I don’t think the company would want to try to hide anything. Downplay yes, but not hide.

      • True. But investigations in Japan are notorious lax and not transparent. Given the situation, I think the likelihood stronger that they will continue try to hide as much as possible rather than disclose as much as possible. From Olympus’ viewpoint, the target that they’re trying to hit is “disclose enough to get this behind us but not enough to kill the company.”

        Frankly, we need the following:

        1. A full disclosure of the original investment(s) that triggered the whole ugly scenario. Exact amount, exact thing that was invested in, exact result of the investment.
        2. A full disclosure of what was done to cover up that investment loss, and who was knew about it and was involved with it (both internally and externally).
        3. A full list of subsequent “maneuvers” (both on and off the books) that were performed to continue to hide the original loss, with exact amounts that appeared on Olympus’ financials. Further, those financials need to be restated to accounting standards that transparently show what happened.
        4. A full list of tainted acquisitions within Olympus, their current status, and what Olympus will do to remove them from future operations. Further, a full set of restated numbers to current accounting standards that transparently show them for what they are.
        5. A roll call: all current executives at the company, under oath, state whether they knew of the cover up or not. Only possible answers allowed: “yes,” “yes, I knew some of what was going on,” and “no.”

        • Ross

          As ideal as you might like to see it, if all is revealed, there is a chance investors will lose more, whereas reveal enough to get confidence back & the company running on track again & there is a possibility of regaining some of those previous losses. Sometimes the whole truth can cause more damage than it can good & this could possibly be the case here. That’s the simplistic way I’m looking at anyhow.

          • tester13

            Thom. How abuot speak freely and openly.
            Nikon and other Olympus competitors (except Panasonic) needs your list points. This will be quite right 🙂

            You shopwed up in every Olympus problems related topic and bashed them.
            It is time to stop.

        • flash

          Sounds like a plan. They really need to start doing some thing like that. I am not sure that they can go back that far though, do to record retention. They maybe able to if the Japanese keep there records a little bit longer then most.

          I feel they also need real solid experienced leadership now. I suggest a recently retired CEO or CFO from another firm. Additionally, some outside directors at least temporarily from their medical customers, their are a lot of good executives in the medical delivery field, and some from the Japanese banking and investing companies that are associated with Olympus.

    • > We need more detail. Far more detail.

      The case IMO became political some time ago. IMO we will not see much more details. And the details we would see be laundered to make Oly look as good as possible.

      Recent visit of Woodford IMO had the sole purpose of forging the compromise on how the details would be presented.

      But let’s looks on the bright side. If Oly would be mostly cleared and only fined for wrongdoings by SESC, their business might recover quickly and probably even unscathed by the scandal (save the BOD/C*O shake up). (Clearance by SESC would suffice, as Woodford has already blessed it.)

      • > The case IMO became political some time ago.

        It was political from 1990, at least internally within Olympus ;~)

        As for today, yes, as I’ve stated several times, I suspect that a lot is happening behind the scenes that is determining the actual outcome. That’s not necessarily “political.” We call it a “lack of transparency.” Moreover, we have both individuals and institutions that apparently have violated laws and/or fiduciary interests, and it is not clear that there will be anyone or thing held truly accountable in that sense. Perhaps we’ll get a scapegoat or two. But there will be dirty hands that remain.

        You’re also overly optimistic about whether this will be over fast. Let’s say that Olympus and the Japanese government announced new results and total cooperation in putting this behind the company. That doesn’t remove the fact that many OTHER organizations and individuals lost one hell of a lot of money. People sold stock in the denial period, and lost enormous sums of money doing so. Something tells me that the US and UK investigators may still have some serious questions even if things seem to resolve themselves in Japan. We also still have some shady folk outside of Olympus to deal with, too.

        From a jobs standpoint alone, Japan’s government, bureaucracy, and banks will want to just put a number on things, punish a few visible folk (probably those already resigned), and try to move on. Whether that means an independent or acquired Olympus doesn’t really matter to them–they’ll have arranged whatever seems best to their personal interests. But we now have several months where critical decisions weren’t being made, and the public has begun shunning their product. You don’t stall the plane and then just magically go on to fly the rest of your flight plan as scheduled.

        • @Thom Hogan
          I wouldn’t worry too much much about UK financial investigators they are notoriously stupid ;~)

          …Most of Olympus’ Pen target market won’t be aware of this story, so I can still see them choosing reasonably priced and aspirational Pens over Nikon V1 and J1 any day of the week.

          European 10 most popular Mirrorless from pixmania.com:

          out of the 27 European counties top 10 mirrorless out of a possible 270 placements Nikon appears 5 times, with Sony appearing 30 times, the rest of the 235 placements is largely dominated by Olympus and Panasonic Mirrorless, with Samsung not appearing anywhere. Population about 600 million.

          btw Pixmania (established in 2000) is probably Europe’s largest online camera retailer (sales of about 1 billion € a year not including it’s parent company) and I’m pretty sure their popularity metric is accurate

          • ckb

            Where on pixmania.com did you find this info. Its such a confusing garish site that I could not find that info. I just want to see what your numbers are referenced to. Thanks

            • chauffeurDeVan

              Don’t lose your time asking. He is not able to read, or extrapolate data. An almost 3 years old E-PL1 is more popular than than the 1 month old Nikon’s. It is only a matter of time before Nikon’s goes at the top.

              And so what, I do not expect Olympus to be the leader in any photographic market and I love them as an underdog – even if they had the best cameras or not – they do not have the infrastructures, the logistics, the marketing and are not notorious enough to be – it take years – decades to go from #5 to number #4 in a market.

              • @chauffeurDeVan
                how did you work that one out?

                It is only a matter of time before Nikon’s goes further to the bottom of the mirrorless market after poor user experience and word of mouth.

                “– it take years – decades to go from #5 to number #4 in a market.” that’s not what happened in the mobile phone market …times are a changing.

                • chauffeurDeVan

                  First, currently, the phone mobile/communication industry is one the most expanding market in the history, like computers in 80’s and the 90’s. Photography is not.

                  Take a look at the car industry, it took GM decades of bad products to lose the leader position.

                  It is not with what you think is a product that Nikon will bankrupt in the next few years. They already have tenth of them and they are still well alive.

                  I’m more worried about what’s happening right now with Olympus than with the Nikon start in the mirrorless segment.

                  • @chaffeurDeVan
                    “Photography is not an expanding market” what planet are you living on, it’s got accessible to everyone with smart phones, apps and cheaper cameras. Photos is what made facebook.

                    • chauffeurDeVan

                      Please when you quote, do it correctly. Do not rephrase at your own advantage by changing the sense.

                      The quote should have been : ‘Currently, […] Photography is not […] one of the most expanding market in the history […] like computers in 80’s and 90’s.’

            • Karl

              Didn’tDidn’t doesn’t comprehend any relevant facts. He pulls irrelevant numbers, doesn’t understand the difference between sales and cahshflow and profit, and he’s a blinkered fanboy who doesn’t even understand when people correct him.

          • flash

            I was impressed by the UK serious Fraud unit, in a matter that I personally was familiar with (once I got passed their Monty Python name). It might be the exception, though. They seemed to have much more ability and professionalism then the US SEC.

    • @Thom Hogan
      you are sounding very Woodford these days ;~)

  • Karl

    “The case IMO became political some time ago.”

    What does that mean exactly? Define what ‘becoming political’ means and what ‘some time ago’ is in your mind.

    • Search the news.google.com for “olympus scandal prime minister.” Read on.

      After some investors publicly and privately questioned Japanese accounting practices and relatively weak securities regulations, citing Olympus case as an example, politicians of the top level had to speak up. Involvement of top political figures generally mean that situation would be resolved as fast as possible – often by any mean possible – because any delays would affect negatively the political ratings of the ruling party.

      But read the Thom’s comment above.

  • flash

    The rumor would be good news if true (hopefully it is); compared to the other wilder speculative rumors. Now they must get their financial statements filed by the exchange deadline, which is a lot of work which they may not be able to pull off.

    I doubt that the camera division individually will be sold no mater what happens, as long as Woody or Kikukaw does not come back, Maybe the whole company might be sold if it is delisted a lot of companies would want the whole thing, got to have those anal probes 🙂 (if you are 50 get one, so you can live longer and take more pictures, hopefully with Olympus cameras).

    The amount of assets that they said they may sale to make their bankers happy is not that much. They use to own a bit of property in Tokyo area, if they still do it should cover the amount they were talking about.

    • lnqe-M

      +1000 😀

    • Karl

      Oh, so politicians promising to root out corruption translates into … what exactly? Pressure on the investigators to … do something? …. not do something?

      Makes no sense. Again, what does ‘becoming political’ MEAN and when exactly was “some time ago”?

  • Really, I don’t give a damn about this ever repeating good and bad news. And I don’t need more details as I’m no businessman.

    I’m convinced that there ain’t a big company on this planet without what we in Germany call ‘dead corpses in the cellar’. I’d rather not buy products of companies that have production sites in slaveholder countries and dictatorships such as China – but have I got the choice? Not any longer. So, why should I care about somebody manipulating their accounts. That’s just peanuts compared to cooperation with supressors, in my eyes.

    I just want Olympus to get their report for the last quarter out in time for 14th December to then keep on producing fine products such as the three great PENs and the two fantastic primes they launched this year.

    For me, no other manufacturer produces as emotional cameras as Olympus and that’s why I want them to stay alive.

    • Karl

      “I don’t need more details as I’m no businessman.”

      So stop reading and replying to these discussions. 🙂 Go read about football.

  • sokar

    All major corporations are corrupt at some level. Politics is the name of the game and if you are not a political animal then one will never make the higher levels of any company. There is a lot of face to be lost here if this is not managed in the appropriate way; inside Olympus is not an issue, but outside of Olympus would not be tolerated.

    Governing bodies are also in the firing line here, and they would be part of the current negotiations regarding the public outcomes of the findings. Has anyone considered who has benefitted from the cheap sell off of Olympus shares? This would not be the first time that a company has been dished up a public fury to deal with and interested / focussed parties in the background buying up cheap stocks, already knowledgeable of the final outcome.

    Many have commented here regarding the Board members and upper level management having full or some knowledge of events over a number of years. Was Mr W not an employee of Olympus for 30 years and in middle to higher level positions for part of his career prior to his dismissal? In most cases, the truth is lost in the good story; this may well be the case with Olympus.

    Will we ever know the truth; I doubt that. Will we get close to the truth; I doubt that also. There is too much face to save. There are also too many 12 hour headlines to report and once the first party has released his story to the media the public is over the story and eager for the next saga to unfold.

    • Karl

      “All major corporations are corrupt at some level.”

      Yeah I hate those ba$tards at Lego and Ikea and Amazon and Nokia. All corrupt.

      :\

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