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Interview with Woodford (and Olympus shares keep losing value).


You can see three (very similar) Woodford interviews made at Financial Times (recommended!), Bloomberg (on youtube) and Channel4 (on their website). Mr Woodford said that he sent a report to the Serious Fraud Office in the UK. That’s going to be a tuff and long battle. Meanwhile the shares are losing another 8% today (Source: Bloomberg).

  • A much better interview in the Financial Times is here:

    • mpgxsvcd

      It won’t matter who is right and who is wrong. He has already devalued Olympus by over 50%. The damage is done. Olympus just released all of their new products. Hopefully, they have something else up their sleeve to divert all of this attention.

    • flash

      Count the blinks. I have been told to do that when interrogating people like him. Most can talk smooth but have not mastered fully the eye contact. Just saying there are a lot of blinks there. Even if he is full of it it does not mean however, there are not problems at Olympus.

      • Fish

        Pretty sure that the number of blinks means nothing…
        Some people blink more that others. Older people blink more than younger. Do you have enough experience with Mr. W to say that this is substantially above his baseline blink rate? Could the fact that he is giving a videotaped interview about being sacked from his career of 30 years over allegations of conspiracy, possibly, maybe have an efect on his emotions or physiology? Maybe if we checked some tarrot cards we could know for sure.

        • Fantastico reply Mr. Fish

          Good show! Sigh, why not roll out the ‘ol polygraph machine too while we are at … in this brave new messed up world where everyone is guilty until proven innocent, I just want it all to end already enough with the old, bring on the new. Paradigm shift, ACTIVATE.

    • flash

      The reporter, in the FT video, at the beginning also stated Woody told her he first became aware of the problems with the transaction based on a magazine article in July.

      If that is true, then there is a problem there. Woody was an employee with Olympus at the time, probally has a lot of stock also. Now, he did not read the annual report of Olympus, in which the Auditors of the time clearly wrote there were issues with the transaction. He also was interviewed for a Job as president, while I never been interviewed for president, even I read a couple of annual reports before going on a job interview; it is even recommended for recent collage graduates to do before an interview.

      Now, even if he failed to read the report, most people who follow Olympus already knew that there were some issues with the transaction, it was widely report. I knew and I do not own shares of it. Olympus articles catch my eye as only a user of their products.

      • I love this reply Mr. Fish

        oops wrong reply click

    • G-M

      This is the best one of them all:

    • wonderer

      you don’t mess with Yakuza!

    • Olympus first response my feeling is that the payment was including the others and not just the Gyrus deal, strange Axum asked to be paid in shares and not cash it suggests they have inside knowledge of Olympus or the medical sector (which might be why the payment was on the high side).

  • Woodent

    someone is going to buy Olympus on the cheap soon :D

    • Alexander

      Panasonic ?

      • flash

        Panasonic is more likely to be bought then to buy anything right now. Look at its share prices and say a 3 year trend. Sony is worst in that regard.

        • Daemonius


          • pdc

            Get real. Panasonic is a HUGE company, so is Sony, and in the electronics world they aren’t going anywhere but up. Sure, share prices are down, but whose aren’t? Apple – hmmm, time to sell I would say. They have had their time in the sun, but Microsoft is going to eat them up. No, I wouldn’t buy Olympus, as the damage is great and they may not heal. Nokia, perhaps.

            • wonderer

              ATi was a company big well beyond your imagination, so was Motorola…

              (both has been bought)

            • Stu5

              Sony have not been doing well for a number of years, which is quite common knowledge. Take TVs for example, they have not made a profit in 7 years. Other diversions are also not doing well.

  • Stock market doesn’t like this type of internal drama. Olympus could lose a lot of revenue and hinder production, and very bad timing after the earthquake earlier this year.

    I don’t know if Panasonic is a competitor or collaborator of Olympus, but both halves seem to comprise the Micro 4/3rds enterprise. Panasonic might not be grappling with an internal power struggle, but they seem to have management and R&D issues. Hence I don’t fathom if Panasonic can retain the M43 throne alone.

    I have a “sizable” investment in Panny M43 products but I’m not loyal to M43, and obviously a lot of others have transitioned into and out of M43. Sony products look pretty good at the moment, and I have 5DM3 rumors bookmarked.

    Olympus is screwing up bigtime.

    • Stu5

      Some of Panasonics M4/3 equipment is made by Olympus.

  • I don’t know anything about business, but he doesn’t look like a man who lacks confidence in his facts to me. He doesn’t look like he’s lying either.

    • It’s not politics where name-calling is a norm.

      Until investigations are over, there is no way anybody can say anything with “confidence”.

      Everything MR.W says now can be used against him in court.

      • He knows that. And he’s still saying it.

        • Chris

          Doesn’t mean he can’t have got the wrong end of the stick… I’m surprised he didn’t seek a second opinion from another accountancy firm and then launch an internal investigation before taking such extraordinary measures.

          I can only think he’s been stewing over the allegations — and his feeling of being patronised by Kikukawa — for months and was delighted to see them apparently confirmed.

          I think he took on the job of CEO wanting to see the company damaged. Why else would pretty much his first action as CEO be to leak company information to accountants and demand that they investigate it?

          The trouble with self-righteousness is that it can impair sober judgement.

          • The Other Chris

            Read the article from Financial Times that Michael posted above. Also look for some links in the other related posts. It seems at least two financial firms have come to the conclusion that something fishy is going on with the books at Olympus.

            • Chris

              Ernst & Young were copied in to internal messages. That doesn’t mean they were convinced something sinister was going on. Mori disputes the figures; he has reasons to minimise the figures, but he may well also have information that PwC didn’t. Clearly Woodford was not authorised to leak the information; he may not have had all the information. PwC may also have made mistakes on the information they do have. I think Woodford, in so unquestioningly accepting PwC’s word over Olympus’, may be guilty of thinking ‘ah, Western company –truthful, transparent! Japanese company –unscrupulous, inscrutable!’

              The FT interviewer is absurdly partial to Woodford, I think. I understand that it’s an exciting news story but she’s simperingly subservient beyond belief. “One final thing I *have* to ask you – this has been presented by Olympus as a clash of culture… [3 seconds pause] Complete and utter nonsense, yeah!” My God.

              I can’t remember when I last saw such a soft interview, and I see plenty. I’m surprised she didn’t ask for his autograph.

              • bilgy_no1

                “Ernst & Young were copied in to internal messages. That doesn’t mean they were convinced something sinister was going on.”

                Well, the issue was raised by E&Y in the reports they made as Olympus’ external accounting firm. Soon after, they lost the contract… That’s why Woodford sent a copy to them, I guess.

                As to the cultural clash argument, why did the Board promote Woodford to CEO less than two weeks before this thing broke out? Didn’t they know him well enough? The guy worked at Olympus for decades, and was in Japan for the last 9 months being prepped for the CEO-role. Shouldn’t any cultural differences have surfaced in that time?

                • Chris

                  I believe KPMG were Olympus’ auditors at the time.

                  He was seemingly brought in to bring a non-Japanese influence as Olympus seeks to globalise. They wanted some culture clash, but they clearly miscalculated.

    • Mr. Reeee

      No one becomes a whistle blower unless they feel confident about their information. He certainly sounds confident about his info. Doing something like that could ruin his career. Why would someone do that? Just because they feel slighted or angry? I don’t think so.

      He’s been with the company for 30 years. Who does that any more? He obviously cares about the company.

      • Agrivar


      • Karli


      • Do

        Don’t underestimate people with narcistic personality disorder. I don’t want to suspect Woodford to be one of them, but nowadays they are overrepresented in managment boards so I wouldn’t say that’s out of question.

        • meh

          There was a study that said that apparently 50% of management in the UK show psychopathic traits.. is that what you are referring too?

          The thing is the vast majority of psychopaths are smart enough to be self preserving, if he is lying it is rather self defeating behaviour…

        • Alex

          +1 for Mr Reeee too!

          And, Do, the best thing someone with “narcistic” personality disorder would want would be to be #1, the top dog, the ruler of a little empire – e.g. TO BE CEO OF A LARGE CORPORATION! He would have kept his mouth shut and learned how to get a cut of all the money being funneled to wherever it’s going, all the while being the #1 of Olympus (Zeus, essentially).

  • It’s a grim situation. I’m doubtful if Olympus can survive this crisis despite the famous Japanese patience. If things come to an end, all I can hope for is that the camera division is acquired by another innovative and creative camera company. Fujifilm, Cosina and Ricoh are better names than others IMO.

    • Frederic Hew

      Olympus’ survival depends on its sales revenues, not stock value. It still is a large, profitable, company.

      Sometimes the total worth of a company in the stock exchange may be lower not only than its assets, but even from its cash balance.

      Stock worth represents only one thing – the investor’s speculation of being able to make money on stocks. If speculators believe stocks will go down – even though the company is doing great – they will sell those stocks making the prices go down.

      Assuming Olympus has revenues and does not depend on the stock exchange to raise money in the very near future, it has good chances to recover.

      That said, this is definitely harmful for the company.

      • Yep, you only have to look at Apple to see that. This story doesn’t affect the products, at least yet. “Internet time” is at play here, where people and companies and products are judged as screwed immediately. Give it a little real time, and we’ll see.

  • napalm

    “Delighting you always.”

    oh sorry, that’s Canon :D

  • According to
    it’s a 50% drop in the Olympus stock price since last Thursday!

    – The imaging division deserves better!

    The board of directors seems to need new fresh members, eg. with a mix from all continents.

    • fta

      Let see:

      52 week high being around June and July with $35.xx (Quoting in US dollar)
      It is currently @ $19.88 which is a 44% drop!

      And 38% of that drop is in the last 5 days!!

      That’s a big enough “blip” to cause some major change and/or damage.

    • According to FY2011 figures at
      their Imaging Systems segment is only 15.5% of the total business.
      The Japan region accounts for 45.6% of their total business.

      Their first quarter results for this fiscal year does look promising as well as the forecast:

      Shouldn’t we see the 2nd quarter figures soon?

  • aher

    i dont know about you guys but i feel that this guys want to bring down all olympus company with him. i feel a bitter man in him. luck yahoo ceo dont do the same thing

  • Oriol

    Here are my thoughts:

    1) When you are a CEO or a General Manager of a big company, you asume from the first day that you can be fired anytime. Most probably, your contract includes a big compensation if this happens

    2) If you see a sign of fraud, then you communicate to the board (as Mr. Woodford did). If you do not receive any answer, then you go to the Police

    3) If you are afraid, you also go to the next police station. I have been 3 times in Japan and I would say it is a democracy and a peaceful country, right??

    4) What you do not do is going to all economic journalists and explain everything! I understand he is furious, but he is harming his former employees who have nothing to do with any type of fraud and who are trying to keep their job

    5) I would like to see all these journalists (FT, etc) interviewing those sharks from Wall Street and the City who lead the world to the present economic crisis.

    6)What I think is that Olympus will remain. Yes, there are a problems now with Olympus shares, but in a couple of months nobody will remember that. People come and go, companies remain…

    Ok, now what about if instead of this serial we talk a little bit about taking photos? ;)

    • digifan

      Respect man. +100
      This is exactly what I said in yesterdays thread.
      This Woodford is one sick egoistic jerk.

      • digifan

        Well sometimes I can make a stupid remark too ;-)
        I apologize for being to quick to judge.
        Have seen a good interview and it seems there IS some real stinky business at Olympus’ top management.
        The only shitty negative is that innocent hard working people could be the victim of this.

    • M

      He needed to flee the country or the yakuza would kill him.

      • Chris

        That’s completely unsubstantiated, and libellous.

        • bilgy_no1

          Libel against who? The Yakuza???

          • Zaph


    • > 6)What I think is that Olympus will remain. Yes, there are a problems now with Olympus shares, but in a couple of months nobody will remember that.

      Yes, Oly would remain. They have some cache reserves.

      But. Checkout the trade volumes of the stock:

      It is not that stock is tumbling, it is that many Japanese stockholders are panicking and dumping their stocks. I do not understand how business goes in Japan – but Japanese stockholders do. And if they do have a reason to panic like that, I think Oly is really into a trouble.

      The most daring accusation is actually the Yakuza connection (the “anti-social”). This accusation (which didn’t come from MR.W) might have prompted the current panic. And it would also cause Oly long-term problems since Yakuza is called “anti-social” for a reason: nobody wants to deal with them, everybody distantiate themselves from them.

      > People come and go, companies remain…

      Well, if head Oly Imaging experts would leave the company, all would remain of it would be an empty shell, printing me-too products. It wouldn’t last long.

    • PS


  • pbrooks100

    Could Panasonic keep MFT technology going all by itself?

    • Brod1er

      Pretty easily I reckon. Panny is a huge corporation like Sony. Although i only use Panny gear (45mm f1.8 could change things), I don’t want this to happen as it will reduce the diversity of MFT. If Oly was bought by Fuji or similar that would be ok.

  • Call me callous, but I just hope this doesn’t delay (or worse prevent) the shipment of the PT-EP06L housing for my new E-PM1…

  • George




    even fanbois cant save oly anymore

    • Why? It does a good job.

    • Wt21

      I just checked. My camera is still working.

      • Brod1er

        One of mine isn’t- but it is a canon!

        • flash

          My canons never work, I have been told it was only me. Now I feel better.

    • Brod1er

      Yeah! Can’t believe they haven’t gone bust already given the woeful performance at ISO12800. The cameras and lenses will just stop working and be useless- what possible value could they have now?

      At least both 4/3 and MFT have a varied AF lens system now=today. Not sure that can be said for others? coughNEXcough.



      Please overload the eBay with your 43 gear!!

      Let me see how say low can you sink the price of E-5s and 35-100s!!!

    • bilgy_no1


      even fanbois cant save oly anymore”

      My E-PL1 just told me to catch a bus!

      • Duarte Bruno


    • lnqe-M.

      George, plees i need DZ 14-35mm F2.

    • Steve


      It is the end of Oly and end of Oly m43. So…does Panasonic get to continue?

  • Bu

    Come on Olympus cameras and lens, fall like your stock so we can shop!

  • st3v4nt

    If this is the end of Olympus….then I will sit wait patiently if there is EP-3 and mZD 12mm discount….after that I move to Panasonic without hesitation….if the FT and mFT going to fall it sure fall with glory…..:-)

  • aher

    if the court find out that Olympus did not do anything wrong he is a dead man, if the court find out that Olympus did some fraud he still a dead man, all yakuza and olympus fanboi will hunt his down.

  • Oriol

    This is not the end of Olympus.

    If we take a look to the past years we will see many great and respected companies who have been involved in serious problems. Examples:

    – Boeing with the delay of the Dreamliner 787 aircraft
    – Microsoft with the failure of Windows Vista
    – Toyota with safety problems of their cars in the USA
    – RIM with their blackberries…

    Now, look at the present problem of Olympus, we have an angry CEO claiming there are frauds involving the board, but:

    – This problem has not affected a vast majority of consumers
    – Besides some business people and camera freaks like us nobody hears about this: go to your colleague in the office an ask him if he has heard any news from Olympus in the past days
    – The problem is easy to solve: a good communication campaign and, if it is proven that the board is involved in any fraud, then they should resign and face the law on their country

    Now, of course shares are in a bad situation but do not forget markets are hysterical and if they see changes in management in the next days the situation will improve

    • The crisis was preceded by continuous and growing losses generated by the imaging division. Olympus may survive after all, but its camera business seems quite vulnerable to be honest.

      • flash

        The first quarter report showed the camera division doing very well, as expected. The report sited the sale of the Pen and xz-1 as good. The imaging division main problem, like most camera companies, is fall of the compact cameras market. In Olympus case the profit margin of compact cameras is too small for them, and they were selling way to many of them compared to their other camera sales. IMHO the second and third quarter reports should even better results.

        Last years annual report was just that last year.

    • Trevor

      I don’t think many people are expecting Oly to close up shop over this, but it presents a situation that could damage Oly to the point that they carve up and sell off pieces.

      It’s different from those previous companies you mentioned. Product delays or bad products are not the same as corporate malfeasance. We’re talking about the possibility of a huge drop in market capitalization (some of which has already happened), lack of trust by investors, possible stockholder lawsuits, and leadership that may be removed at many levels. Sales or customer loyalty don’t overcome those. Even if consumers never heard about the issue the company could still be in dire straights.

      That’s IF everything Woodford is saying is true and/or proven. But, it’s cause for concern that the imaging division (all ready a money loser) at least will trade hands.

    • Stu5

      Yes they do hear about it. It’s been in most of the UK national press. It’s been on the main BBC news website and their Teletext services. It’s also been on the main CH4 evening news.

      This is also totally different situation to your examples.

  • Kiri

    I guess now we know what they meant by “cultural differences”.

    Ironically that statement actually says a lot more about their culture than his culture.

    It’s a shame that everyone in the company has to suffer because of the arrogant idiots at the top though. Hopefully they will all be forced to resign and can restructure the company.

    • Atle

      Arrogant idiots at the top that makes everyone suffer isn’t a thing unique for Japanese culture, its abundant in Europe and the US too :)

  • Miroslav

    I don’t expect this will impact Olympus m4/3 greatly. It’s a very small part of the company. If any breakup of Olympus occurred, I believe there’ll be many wise investors who will see that Olympus m4/3 division can be very profitable with some relatively small product and marketing changes. I doubt that department can be managed poorer than in previous 24 months, since E-P2 launch.

  • Patrik

    Its a bad situation for the Olympus company to held a corrupt board at the top level! Its devastating to see such incompetent at the top! But as we all know, Japan is still a Country of a lot of corruption in government and business! It sais a lot about Japanese business climate! I hope Olympus will go through this, for all Oly lovers!!))

  • DonTom

    What a fascinating saga! Mr Woodford was right to get out quickly. When you are in a foreign country and you discover massive wrongdoing – RUN! As soon as whoever is responsible discovers you have some evidence, you become a target.
    Business in Japan is very complicated, but one thing is consistent: those with the real power prefer to stay partly in the shadows. A comission paid of this size can only mean fraud or blackmail. My guess will be several heads will roll at Olympus, quickly. Now that the core issue is in the public eye, someone will be made responsible. Who’s up for Hari Kari this week?

  • adam

    I’ve always wondered…does Scotland Yard have an Office of Non-Serious Fraud??

    • Kiri

      Hara Kiri.
      “HariKari” sounds more like some kind of instant Indian food that comes in a can.

  • Berneck

    I think many of you are missing the point. This has nothing to do with being self-righteous or “wanting” to damage the company. If these allegations are true, he did the absolute right thing. You can’t just cover something like this up forever. It will come back to bite you, and then it becomes your fault, even if you didn’t take part in it. Japanese are all about honor on the surface, they will do anything to hide something like this to not face the shame publicly. In the long run this is not the right thing to do. Let’s just hope this apparent fraud is not deeper than it seems, and they can fix the problem and move on.

    As a shareholder you assume this risk. If you can’t afford this risk, you’re not diversified enough, or you shouldn’t be in the market in the first place. Don’t shoot the messenger because you don’t like the message.

  • infared

    This is upsetting ….I was planning on using the Olympus Olé Face Cream so that my complexion would be at its best when I was out shooting with my new 12mm, f/2.0! Also, I was hoping to store my lens hoods and caps in the new Olympus “Tuppeware”???????
    Something is very wrong with this whole situation.

    • flash


      Cream and Plastic containers are part of Medical Goods, So on it face there may or may no be a problem there. Note, Tupperware Products can sue as he stated that Olympus bought them but that is not true.

      • Trevor

        Flash, I’m not sure what country you’re in, but he’s not liable for slander or defamation in the US or UK for a statement such as that. Yes, he used a brand name to refer to a generic product (he said they were buying companies that were producing Tupperware instead of saying buying companies that were producing plastic storage containers), but that is wholly different from saying Olympus purchased Tupperware Brands Corporation. Various brands become genericized over years (aspirin, zipper, escalator) from just such use. Allowing strict liability for such statements would create legal catastrophes and be an impediment to free speech.

        • flash

          It is not the brand name issue, it was the change in ownership. It is a minor issue, but it is actionable. Tupperware will have to show that they were hurt by his statement, then it is pretty easy to get a settlement against him.

          • Um…guys…ah…I was just trying to make a sarcastic joke about the hand cream and the burpable-lid storage containers (lawyer-ease correct?) not having anything to do with technical or especially photo equipment (since this IS a photo website)……but your conversation does prove to me..if all of the lawyers were wiped off the face of the earth tomorrow…I would not miss one of them. Not one.

  • Karli

    [delete me]

  • calxn

    So does all of these exorbitant payments to organized crime explain the need to keep the prices on their equipment very high? I wonder how much of this criminal action affect the bigger camera companies like Sony and Canikon. From what I’ve read of Samsung, I’m pretty sure there is a LOT of shady activities there.

  • MichaelKJ

    Oly’s stock price is now where is was 18 months ago in March 2009. Yes, a lot of market capitalization has been destroyed, but companies have recovered from much worse declines.

    Of course, this assumes the sell off is at or near bottom and that there won’t be more evidence that supports Woodford’s allegations.

  • Zaph

    One thing stood out – Mr Woodford said that single payment was *2 YEARS* of Olympus profits. No wonder they are stuck with the same sensor, and have no money for development.

  • Joe

    This guy might be right, but he seems to enjoy bringing down an entire company.

    • He is trying to save the company – the company he had worked 30 years for.

  • Eric Calabros

    some bad guys in Oly treated Woody in a bad way, and he is doing the same to them now. those bad guys ruined his efforts in years, and he is ruining their achievements, in matter of days.

  • Ab

    Only time and the courts will resolve this. As long as they keep making lenses and products like the E-5, EP3 and 45mm f1.8 then i dont really care. Mischief as the top is nothing new, and nothing special in Japan.

    I think people need to remember the BILLIONS of dollars that have lined the pockets of the mobsters, sorry banksters, in the US.

    Life goes on, as does picture taking.


  • Rocky
  • gianca

    Having dealt with Japanese corporations before, and knowing their record for systemic entrenched old management and relentless resistance to transparency I’m not surprised a bit by these news.
    Mr Woodford was brought in to do a clean up and restructuring: if he did run into cooked books (which seems likely) he just did the right thing by bringing up to the upper management and trying to resolve in a direct, transparent way, maybe a bit radical if you want but then he was just doing the job he was hired to do. To expect him to behave in a different way is disingenuous at least.
    He claims he has been threatened, and if that is true even if wasn’t a sinister threat but just a angry reaction to the initiative of Mr Woodford, there are many clues that this could be a potentially dangerous situation and I believe Mr Woodford did the right thing to go public to protect himself: he did not start the fight, but once in the mud you do what you have to do.
    I read in some of the comments above he shouldn’t had come out public: to whom advantage? The employees? The customers? The shareholders? The Board?
    If all these claims are true then the medicine would be unpleasant not matter what, but in the end it would be necessary for the former, and lethal to the latter, well then too bad.
    I really feel for Oly engineers: they gave us the first DLSR system exclusively designed for digital sensors, telecentric lenses, tiltable screens, in body stabilization, mirrorless dlsr, and all of these most of the time before anyone else: yet, not matter how you turn this story it seems to me that in spite of their great efforts they were run by a really bad management and as Oly customer since E1 I could not welcome their departure any time sooner.

    I hope this could be the best thing ever happened to Oly, and I could not care less about shareholders and the board, because it is obvious to me they could not care less about their engineers and at least but not last customers like me.


  • wat

    good thing most here are only photographers, because the understanding of corporate business, accounting, fraud procedures etc is unfortunately low. whistleblowing shouldn’t be immediately condemned as sour grapes. when someone does that, they are jeopardizing their future career. it would be career suicide to spout off numerous false allegations. also, often times, an executive severance package is contingent on refrain from making public statements. google carol bartz and how much her statements cost her. just sit back and watch this one play out. nobody here knows what goes on behind their closed doors. if you do, you definitely shouldn’t be posting here publicly.

  • Michael

    This is the letter that got Woody fired:

    No wonder he was fired & threatened – this is almost unbelievable stuff, if true. The Olympus board apparently seems to be corrupt, because any normal decicion making process could never be so faulty and bad.

    But why would Woodward want to ruin the company he worked for 30 years? Either, he is honestly shocked to the bone (which would be quite naive). Or because he has no other choice, in order to protect himself. (remeber: now, he will likely never again get a management job in a responsible position).

    However, sending that letter CC to that large number of people is a blatant affront, it would be so even in the west (hey man, give the people time for a reaction first!). This letter screams “fire me”

    • Esa Tuunanen

      >But why would Woodward want to ruin the company he worked for 30 years?
      So top management bleeding very major amount of company’s money to some shady consultants isn’t harmfull to company?
      Money which could have otherwise been used for things like R&D? For example imaging division has been completely, and more than, anemic in expanding m4/3 product range to challenge other systems and cover also customers of killed off E-system.

      And then there’s the whole world of him possibly becoming under charges for hiding things from stockholders. (now that would surely boost chances for getting future responsible positions…)

    • cL

      Thanks for the link. I wonder how that article got disclosed.

      In any case, I scanned through the entire correspondence and watched the video posted by you at the beginning of this thread.

      Here is what I think and I invite Thom and you to share the thought and please correct me if something I missed from the reading.

      AXAM is part of AXA Financial Group, a rather large American Financial Consulting service. It is through their advice the Gyrus acquisition was made. The acquisition was made via preferred stock but then paid off with cash (repurchase of preferred stock). In the process, loss of ~USD$400 million. The reason to purchase using prefer stock, again, is according to AXA’s advice for taxation purpose. I think the reason to purchase prefer stocks immediately back at a loss is because Olympus is a conservative company which doesn’t like debt. I see no wrong doing here. More or less than bad management decision and lack of knowledge of U.S. taxation laws and American business model. The last time I checked, bad business decision is not a crime. My own parents are very conservative also and they’ll pay off debt whatever the cost. A major difference in culture obvious.

      The fact AXA is based in Cayman Islands created a lot of mystique. Many financial companies have operation in these “off shore banking” islands. Having an operation there doesn’t necessary equate wrong doing, but more like for taxation purpose (notice how high taxation rate and complicated law codes makes companies to think “differently”. U.S. tax laws has to change. It is the enemy of people and the #1 reason for less than transparent business practice).

      In the U.S., issuing shares for acquisition is good because IRS loves it (and gives you tax break for it), because U.S. government doesn’t like money laundry. Cash based transaction is very difficult to audit as it leaves no audit trail. On the other hand, conservative Asia culture cash based transaction is good as it is much easier or “cleaner” way to deal with things (maybe Woodford doesn’t quite understand it. Language can often get lost in translation, so perhaps he misinterpreted the word). Cash transaction doesn’t carry over to next fiscal years, so it’s cleaner way to do things. But Americans don’t feel bad about carrying debts, and perhaps may even interpret paying off debt when one could use “free money” as irrational decision. Perhaps Woodford interprets it as shady business or why would one pay cash when one could carry debt and pay over time?

      My impression of Olympus is, it’s an engineer’s company, and doesn’t know much about finance. Many of Woodford’s management style maybe too modern for them to understand. Even when I was in business school, professors forewarned that many older business (we’re talking about American business, even) still don’t quite understand time value of money, so it’s the reason why we’re still learning ROI and payback period, the terms older managers can understand. Woodford probably was a little too over-assertive, which is not really an Asian value. Perhaps all these created some sort of mistrust between people. Use some financial jargon (or any technical language) to people who don’t understand them is easy to make people skeptical of you.

      Woodford is also new kid in the block, so you can guess how the interaction acts out. If you’ve seen Bill Murray’s “Lost in Translation” you know how lonely and helpless it can get when you’re in a foreign country. And when you don’t quite understand the language (some of them might be slangs and most cultural drifts don’t quite translate well), it’s easy to feel he is locked out in the dark and everyone is out to get you. I think perhaps subconsciously it may cloud his judgment.

      Even without cultural barrier, even Maitani himself has to earn his place in Olympus. The story goes the first Olympus PEN he designed for Olympus was funded by himself because Olympus engineers blocked him out and prevent it from even marketed under Olympus name. Maitani, like other Japanese, just worked quietly and slowly earned his respect using his actions within the company. Woodford, obviously doesn’t quite understand Japanese culture tried to earn his place via words. In a culture where action speaks louder than words, it’s not going to help him earning any cooperation and respect. It may take years (if not decades) before one can earn a promotion and he came from outside of Imaging division, received the CEO title (instead of working his way up) suddenly wants to change the whole operation within six months…. No wonder nobody liked him.

      I don’t think this is cultural specific, as this type of thing also happen in the U.S.. Many people get fired over things other than performance all the time. He should feel lucky he was a CEO and his high profile allows his voice be heard. Most of us who got fired over stuff like this would just go find another job, hoping the company who fired us for the wrong reason won’t incriminate us. What could 99% do other than going on the street? (though I don’t think the protesters did the right way, as this kind of protests often reduced to rebel without cause…).

      • @cL
        well said and thought out :D

      • AXA Financials or AXA Group are not the corporation before referred to. It’s another company called AXAM, and here’s the key sentence anyone needs to read:

        “[Olympus] made a series of payments approaching USD 700 million in fees (equivalent to approaching 35% of the purchase price of Gyrus) to a company in the Cayman Islands, whose ultimate ownership is still unknown to us.”

        If you can’t find fault with anything in that sentence, then there’s a clear question of fiduciary irresponsibility on the part of the Chairman. Indeed, even if you can find fault with part of that sentence, there’s still a clear question of fiduciary irresponsibility, as there’s no evidence that AXAM actually provided Olympus anything for this money.

        The other sentence that one would need to find fault with is this one:

        “The company made investments totalling [sic] approaching USD 800 million with the final share purchases being made in April 2008, yet, the value of this investment was written down by almost USD 600 million, to only 25% of the value, within the same fiscal period that these last share purchases were made.”

        Those two statements, taken together, represent more than US$1 billion in money that left Olympus and shouldn’t have. The response so far from anyone involved at Olympus has been “it was only half that much,” as if that explains anything (nor was there any support for that claim, unlike Woodford, who has provided facts that can be checked).

        It doesn’t matter what you think of Woodford at this point. He has raised questions based upon testable facts that, left unexplained, are highly damaging to the former Olympus management team. Which also happens to be the new current Olympus management team.

        • From Reuters:

          “The Japanese company said in a news release it had paid the financial advisers $443 million to buy back preferred shares, but it did not name the financial advisers and said it had no knowledge of their whereabouts following the completion of the transaction.”

          That would essentially be a complete admission that the first sentence I highlighted is correct. (The $443 million number is just the preferred shares–there were other fees involved that bring the total to nearly $700 million.)

          • cL

            Yes, there are fees. Fees are normal part of raising capital, so for this argument, it’s sunk cost and considered immaterial to decision making. Raising equities usually is substantially more expensive than debts, with preferred stock in between. I think you know all this. Fees can be 10% and up.

            From what I understand (his words in the memo are muddy), Olympus bought preferred stocks back with cash. Preferred stock is perpetuity, so heavy discount were issued at the beginning (and fees are usually deducted from the proceeds), and when Olympus buy them back, it paid back at par value. The coupon rate is 10%. My finance ability is rusty at this point, but if you can’t figure out the rate from the info I gave you, get some intern to calculate it for you. $400 million “loss” is probably the present value of interest rate (therefore, the discount…). Remember the value of a bond/preferred stock (also called a hybrid instrument), is consisted of two portion, face value portion and interest portion. Both must be discounted at time of issuance. As they draw close to maturity rate (which doesn’t apply to perpetuity), their value will be close to par value. The discount is the heaviest at the time of issuance, and Olympus bought back stocks only two months after issuance….. Of course there is a heavy loss. This is intermediate finance… (and also mentioned again in intermediate accounting, and if you learn banking, it’s very similar to STRIP in philosophy, except STRIP you need to calculate all this with calculus).

            All these are complicated matter. To outsiders, it’s easy to be very skeptical because the sheer number pay for the interest is just such a high number (even in real estate, most of the monthly payments are actually going toward principal. A 30-year usually the homeowner spend 20+ years paying interests portion and very little toward the principal in the first 20 years). Interests are compounded so it’s VERY expensive. 10% is not cheap at all at present market (preferred stock dividends are suppose to be cheap), and probably unheard of in Japanese market. What’s Woodford’s background? Does he possess a finance degree?

            If it’s just discount from the preferred stock, the “loss” can even be written off as (short-term) capital loss and receive tax break (under U.S. law, don’t know how Japanese tax law goes). To finance outsiders, this also looks like a questionable “expense” account but is actually legal. Maybe Woodford would love to attack on that account also? Like I said, the U.S. tax law is just too complicated for everyone’s benefits, and unnecessarily creates antagonism between people of difference classes. I welcome flat tax rate as it will benefit middle/lower income families the most.

            If Olympus goes down for this, it’s the Olympus employees who will get hurt the most. I don’t care if Olympus goes down because as a photographer, I benefit from it (cheap gears). If Sony is smart, it’s time for hostile take over and will be their best chance to leapfrog Canon/Nikon. Olympus’s financial isn’t affected by the temporary sell-off per se (it’s the reputation and long-term revenue which may or may not get hurt), but when the stock is sold at a heavy discount, it’s a prime target for hostile take-over. That’s what Woodford is essentially achieving. He is just a rash-minded idiot, who can’t even see the long term landscape of business. See why I said maybe he was working for a competitor? For someone who worked for the company for 30 years, his loyalty to the company is rather fragile.

            • cL


              Please delete the above post as it is outdated. Thanks.

            • His words aren’t muddy at all. I understood them perfectly well, as do most people I’ve talked to (and it’s not just one memo, it’s six).

              Fees for giving advise on an acquisition rarely rise above 1%. But the whole process here is much more complicated than “just a fee.” Why preferred stock would have been issued is also in question. Why it was bought back the way it was is at question. Who the payments were made to is not disclosed other than the name of a company that doesn’t exist any more, and was always a shadow due to it’s being registered in Cayman.

              Your attempts to explain things leave a lot to be desired, mostly because they aren’t based upon the actual facts, which Olympus themselves have now agreed are correct.

              You continually seem to regard Woodford as the “bad guy” here. I’ve actually found nothing in his behavior that suggests he had any ulterior motive at all, and as I’ve noted, he’s still a board member with a fiduciary DUTY to report malfeasance. Yet I find numerous things that indicate that Olympus management, particularly the chairman and the board, were trying to hide information. Not just from Woodford, but from investors. And they still are.

      • Chuck

        In light what you wrote you obviously missed too many classes in business school to understand the problem. The problem is that the board would not answer simple questions which would clear up Mr Woodfords concerns. He was stonewalled and fired by the board. This is not something even a Japenese Board will do unless they are in trouble. No matter what accounting was used payments like these were idiotic. You would get an F in my class for your incoherent Drabble.
        Btw he was with the company for 30 years and quite adept at working within the Japanese Culture of this company so your theory about cultural problem is unfounded. He actually gave the board an opportunity too come clean by themselves but the board choose the scorched earth policy.

        • cL

          @Chuck and @NKI

          You don’t have to rude. I probably misread some statements because “I” couldn’t understand what Woodford was trying to say in his memo, I could not understand how can Woodford’s inability to communicate effectively and/or my inability at catching his meaning suddenly becomes “I need to get a refund from my business school.” Not only there is no logical connection, but more seriously, it’s a personal insult to my school and ad hominem. If you were indeed a professor, I am sure you are expected to learn how to correct students without using insult. It’s not constructive. People do look at you as role model and they’ll just learn your verbal tactics off you subconsciously.

          Have you ever worked for a foreign company for 30 years? How much culture did you learn from it? When you’re higher up like Woodford, you will learn very little. Most people would just revere you and talk very little to you, so your direct contact of local culture will be VERY limited. Even less if you don’t speak the language. Correct me if I am wrong (I could be wrong), his job as CEO was the first time he was actually working in Japan on long term basis (i.e., actually lives there, not business trip limited to 1-2 weeks). His old post was actually in Europe.

          BTW, this type of discussion should be for some result, instead of proving “I am right, you’re wrong.” We’re here to learn something we couldn’t understand before. Incorrect hypothesis will be made along the way. I do appreciate people correct me, but I do wish everything could be carried out in a more civil manner. And I do apologize if my contribution adds nothing to your knowledge.

        • cL


          Okay, I forgot to ask, which part of my post was considered as incoherent drabble to you? I need to know where my mistakes are, don’t I?

          NKI already corrected one thing that these financial fees shouldn’t be over 1% of overall transaction. But as you probably could understand, I did not even know the $629 million were fees, but incorrectly thought them to be the loss due to preferred share issuance. So beside that, what I wrote was wrong? I do need to know that you know, so I don’t keep making the same mistake.

          FYI, I rarely miss class. I was actually a very hard working student, and rarely go tardy and I had very good and diligent professors. So thank you again for you humanity class.

      • physguy88


        CL your interpretation is completely wrong.

        AXAM is not AXA. It is a shell company designed to _sound_ like AXA. It stopped operating and disappeared immediately after the last payments were made. No one ever found out who actually ran the company, or what it actually did, or even if it even existed as an operating entity at any point.

        The payments of $700 million were NOT to buy Gyrus. That was a separate transaction for ~$2 billion. The payments to AXAM were purely for “advise” regarding the Gyrus purchase. The normal rate for such advise is 1% of the transaction price, or roughly 20 million dollars. In _extraordinary_ cases the fee might be 2%, or 40 million. AXAM was paid $700 million.

        The board was not inept. There was not error in judgement. This was purely criminal.

        • cL


          Thanks for the clarification. As I mentioned before, Woodford’s memo has muddy wordings and I was under the impression AXAM is part of AXAM and AXAM was the adviser for Gyrus acquisition. So preferred stock issue is merely for financial advise only? That is of course questionable. I am not questioning Woodford’s right to question the board, by the way. He does have the right. But I hope you can see my doubt toward Woodford’s intention is actually whether he was reading between lines and interpreted something perfectly legal as something wrong because he already “made up his mind” that the members of the boards were guilty, therefore, make his entire argument based on a predetermined mind, which is no longer impartial.

          The reason I invited Thom for the argument is for second opinion. There can be items I misinterpret. And I certainly don’t want to accuse Woodford the same way he accused Olympus, because we don’t know who is right and who is wrong at this point, so everyone is innocent at this stage. The last thing we want to do is assume. And it looks like my assumptions has been corrected by you and others, so I do appreciate it.

          However, how do you know the board was purely criminal with the information provided? I did not even accuse Woodford’s words to be invalid in my argument, for the reason we do need to give everyone a benefit of a doubt. What I was doing was to check if there is any reason this can simply be a misunderstanding from Woodford’s part. If we judge everything base on the accuser’s argument, then every court case plaintiff would be the winner, wouldn’t it? How is that impartial?

          What we believe to be true sometimes isn’t necessarily true.

          • physguy88


            There’s just no other way of explaining what they did. There is no room misunderstanding.

            How do you explain sending $700 million dollars to a Cayman Islands “advisory” company that disappears off the face of the planet 2 weeks later? How do you explain the fact that this company provided no actual services that could be documented, or that the Olympus can not actually not name the company’s operators? How do you explain the fact that the chairman and vice chairman alone approved and directed the deals without any due diligence what so ever?

            How do you explain the fact that, a few months later, the company management then paid over $900 million dollars to buy 3 firms (a make up company, a tupperware company, and a recycling company) with a total of less than 150 employees and no profits?

            You could not blame this on Woodward misreading documents because he hired an entire team from PwC to investigate. The Olympus board members are either the most thoroughly daft bunch of nincompoops in the history of business or they are doing something utterly criminal.

            The other part of this is that Woodward is apparently so confident in his evidence he went to international press to throw all of the sordid details into the limelight. People like him would never do this if there was even a shred of doubt that he would not prevail in any legal preceding in the UK. He is out speaking on this matter now because he knows he caught them with their pants down.

            Yes, there are two sides to every law suit, but in this case one side has its drawers hanging around its ankles.

            • cL


              I will rest my case and follow my own advice that I should remain silent in matter that’s purely speculative. I also found myself perhaps I got too involved into protecting my own honor and reputation that I may went on an outburst, which ironically, is what I accused Mr. Woodford of. Never argue something with heart, but with brain. Instead of participating in idle gossips and bring shame to my own alma mater in the process, I’ll spend time doing something more productive.

              • physguy88

                Whether you are right and wrong trying to understand the facts and holding a viewpoint doesn’t bring shame to you or your alma mater! While I don’t agree with your views I respect you as a thoughtful and open minded poster.

              • But that’s the thing, the matter is NOT purely speculative. So far, none of the facts Woodford asserted has been actually denied by Olympus (though Mori tried to the first day, he’s gone quiet and the company has now acknowledged that the numbers are correct). In point of fact, they have essentially admitted to most of the facts. What they simply haven’t done is tell us “why.” The two possible explanations are “inept” or “criminal.” Which they’ll eventually choose I can’t say for sure, but “inept” sounds like a winner compared to “criminal.”

                The real problem for Olympus here is the sheer scale of the thing coupled with the fact that the three Japanese companies are still on their books and losing money.

                My prediction is that Woodford won’t be the only person leaving Olympus.

                • physguy88

                  They’ll go for the inept defense, but in reality it’s likely criminal.

                  I would not be surprised if somebody goes to jail, commits suicide, or gets killed over this.

                  Woodford is already asking for police protection.

          • Well, one of your key misunderstandings is that there is NO company called AXAM. The group you think you’re referring to is AXA, not AXAM. It’s highly likely that the AXAM name was picked by someone to fool people like you, who weren’t paying close attention. AXA is a legitimate and large investment firm. AXAM is a non-existent phantom corporation that no longer exists.

            You also seem to not be following the sequence of events. Woodford actually was TRYING to deal with the board on this. There’s a lengthy sequence of things that happened. But basically the turning point was that the chairman and executive team stonewalled him ON A FINANCIAL QUESTION THAT HAS CURRENT IMPLICATIONS. As CEO, when that happened he had two choices: resign or try to remove the board. In both cases he would have had the fiduciary obligation to make public the information he has. You have a board that is NOT representing the interests of its shareholders.

            At this point, I’m pretty convinced of that last sentence. When I saw the current financial information revealing the status of the three Japanese acquisitions, it became clear to me that they are sham acquisitions. Coupled with the AXAM thing, the board has an awful lot of explanation to do. There choices are:

            1. Reveal the full extent to which they did due diligence on all these acquisitions, who they made payments to, and why, and give a clear explanation of how those things benefited Olympus.

            2. Reveal that they made mistakes and DIDN’T do due diligence, made verbal commitments for billions of dollars without board votes, and can’t explain how those actions benefited Olympus.

            If they choose #2, they should be fired. If they choose #1, they have an awful lot of facts that are going to get in their way, and I doubt they can adequately describe how three businesses that currently lose over a billion yen a year actually benefit Olympus. One key point: they wrote off most of that acquisition in the quarter they made it. Tell me ONE company anywhere else in the world that has done that.

      • NKI


        I recommend that you try to get a refund from the business school you attended since you obviously learnt nothing there.

        Just to make it clear to you, Olympus paid almost 700 million in advisory fees to AXAM (no relation to AXA – which is a French company and not American) for a 2 billion M&A deal. That is 35%. For M&A advisory, most companies would not pay more than 1%.

        • physguy88

          Oops wrong place

  • elleyy

    Grow up mr. woodford. Every company has its do and donts, styles, and culture. This guy is just keeps on crying.

    • Zaph

      And Olympus’ “do and donts, styles, and culture” seems to include major fraud that is making the company a minor player in the industry they could be leading. Guess that’s just the Olympus “culture”, right?

  • FT1 – probably fake rumor

    “AXAM is a Cayman Islands based company which is fully controlled by Thom Hogan as one of the most important advisers of Olympus.
    Thom Hogan got the money 2008 in cash for starting a marketing campaign for Olympus 2011.
    The Olympus image division is not very famous in the US. So Thom Hogan developed a strategy to push the brand “Olympus” in all important media.
    One of his ideas was to hire a British manager called Woodford within the loyal Olympus stuff for president and CEO (the first not Japan English speaking Olympus CEO) to assure a global reception of an international auditorium (at least in UK and US). Part of the strategy was the creation of a balance sheet scandal to gain popularity for the rarely known Olympus brand through a conspiracy theory. Thom Hogan will get another bonus from Olympus if the risky strategy succeeds – moving Olympus to a new stage of globalization.”
    Just kidding!!!
    No, the warlike operations of the last days are too serious for getting sarcastically or cynically!
    It is high time to speak the truth!!!

  • Kung Lao

    Woodford must be a joo. Only a joo would resort to backstabbing tactics hook nosed tactics and it’s well known joos hate Asians.

    • This comment is offensive and uncalled for. It should be deleted.

      • DonTom

        I agree. Totally uncalled for, unhelpful, and please, admin- delete the comment and ban the user!

  • gl

    Like most of you I don’t know anything about the people involved or the company’s history, so it’s all speculation. But one possibility we haven’t considered is that Woody may have been planning a coup. His letter (without knowing the context) does seem very aggressive – not in the claimed facts, but that he was immediately expecting the (as I understand it) long-running big dogs to outright resign without given them a chance to explain themselves – so shortly after having been elevated to his position by them. Of course the two narratives aren’t mutually exclusive, he may have planned a coup, and found evidence of wrong-doing to make it possible. So the showdown could have been a high-risk gamble that backfired.

    One thing’s for sure, as much as we want to believe in all-good and all-bad guys, the truth is never that convenient.

    • BS Artiste

      Aristotle’s retort would be that you are stating a convenient truth that the truth is NEVER that convenient.

      It is indeed possible that 1) Woodford is 0% right and Olympus 100% right, 2) Woodford is 100% right and Olympus 0% right, or 3) anywhere on the continuim from 0 to 100% of a party being right.

      Aristotle’s issue is that one can’t make an absolute statement that there are no such things as absolutes.

      Time will tell who is telling the truth. People just have to wait for the facts to come to light.

  • physguy88

    You guys are giving Olympus way too much benefit of the doubt in your interpretation of events.

    Woodward is not lying. His version of events are backed up by an independent forensic accounting investigation by Price Waterhouse Coopers, the largest independent accounting firm on the planet.

    The facts of the investigation are damning and incontrovertible:

    Olympus paid a Caymen islands shell company almost $700 million dollars for basically nothing under the behest and direction of the Chairman of the board of the company and his deputy. Immediately after the last payments were made, the shell company disappeared from existence, destroying the possibility of learning whom actually received the payment.

    Subsequently, Olympus also acquired 3 small companies of trivial value for ~$700 million dollars more.

    There are, mainly three possibilities that could even begin to explain what happened:

    A) The top level management used payments to the aforementioned shell companies to steal over 1 billion dollars from Olympus share holders.

    B) These were a series of payments to organized crime, which had a shadow stake in the company.

    C) A combination of the above two things happened.

    When Woodward decided to go public, the board fired him, and he high tailed out of the country quick because he rightly feared for his safety.

    For those thinking how this could possibly happen in Japan (and by corollary that Japan is cleanly and transparently governed and thoroughly democratic), I suggest reading into the workings of the Japanese government and the relationship between government, big businesses, and organized crime there. There is no dispute amongst experts that corrupt relationships are deeply entrenched.

    In short, Olympus shares fell 45% because the entire investing world learned this week that the top management of the company is participating in a criminal racketeering conspiracy that is stealing billions of dollars from share holders through payments to shell companies. In the US all of these guys would be going to jail.

    • Michael

      It is quite surprising that Olympus, after the “loss” of >1 billion, is more or less healthy as it is (or, maybe, we will see the decline soon?).

      But you really wonder where Oly and m4/3 could be, if that money was used for meaningful things…

      Let the shares drop another 10 or 20 %. Then it is time to buy some oly shares. Medical business is doing well.

      • chuck

        Another drop of 10-20% will make the sum of the parts much much less valuable than its parts. At that point someone will come in buy the company, auction off the money making medical and industrial parts and dump the rest. What happened to Pentax could soon happen to Olympus. I do not see this incompetent board as being capable of stopping this.

        • cL

          Exactly. Though even at this point, it’s a bargain. I don’t think Olympus was selling at a premium to begin with, though I should go read the financial statements rather than making an assumption.

          GE and Philips are possible bidders for medical group and Sony will come out to be the big winner if they bought Olympus for imaging division.

          Pentax case is different. What Pentax did is their own management problem (don’t know where the market is). Olympus issue is unknown. If Woodford is right, then it’s bad management issue. If Woodford is wrong, then it’s corporate espionage.

    • cL


      The reason I gave Olympus the benefit of the doubt is the same reason I gave Woodford the same benefit. In the U.S. law at least, we assume everyone to be innocent until proven guilty. So far we have only heard from Woodford’s argument. If we make judgment based on one person’s opinion, then where is impartiality?

      Because we only heard from Woodford, so my role is mostly a devil’s advocate. However, if you read my argument very carefully, I did not try to incriminate Mr. Woodford either. All I was saying it is possible the whole thing is just a folly, a misunderstanding. But I do not like his malicious intend to drag down the entire firm, that I do confess.

      Like I said, he has every right to question where the money has gone. But the end does not always justify the mean. Remember the HP scandal? The chair lady (I don’t remember her name) has every right to stop the company secret from leaking, but that doesn’t give her right to tapping on other people’s home phones. She should considered herself lucky she was not thrown to jail for it. Woodford did NOT do something this radical, but I am pretty sure there is a more diplomatic way to handle his dismissal from the company, which I do believe is somewhat unjust (if what he said is truth). But instead of attacking the problem head on, he decided to drag down the company instead…. This case is no longer about unjust dismissal, but it’s a case about his ego.

      • I think you have things backwards. Woodford has done nothing wrong given that he was cut off from fulfilling his fiduciary duty by the board. Oh, wait, that was the whole thing the HP board was trying to do, too: cut off other board members.

        In this country with have whistle blower protections, though they’re not always very good or even used. I’m not quite sure of the Japanese law on this, though they have a lot of parallel structures, and even an SEC-like unit that is probably now investigating this closely.

        You’re also making an accusation, by the way: that Woodford is “dragging down the company.” I hate to break it to you, but there was already huge problems at the company, and someone was trying not only to hide them, but to ignore those that have brought them up. Woodford wasn’t actually the first to raise the questions about these accusations. They’ve been raised by others previously. The only thing that’s new is that we have some more specificity on some of the details. My interpretation has been, and continues to be, that Woodford was trying to clean up the company. He still is. And it still needs cleaning up.

  • gl

    Aristotle and I don’t agree then ; ).

  • gianca

    Olympus Confirms Price for Purchases
    Imaging Company Spent Total of $957 Million for Small Recycler, Cosmetics and Food-Container Start-Ups

    Full article:

    Olympus contradicts chairman over fees

    • gianca

      Seems the link i posted requires as subscription, but google news shows the entire article, which I repost here:

      TOKYO—Olympus Corp. confirmed that it spent a total of ¥73.49 billion ($957 million) to buy three small, closely held Japanese companies several years ago—deals that are a center of controversy after the Tokyo-based manufacturer fired its chief executive.

      None of the companies, which are in industries far afield from Olympus’s cameras and medical equipment, has more than 50 employees. And none had more than ¥900 million ($12 million) in revenue in its most recent fiscal year, according to an estimate by credit-research firm Teikoku Databank Ltd.

      Olympus said Wednesday that it had believed the acquisitions were bargains at the time. The company declined to give financial results but said the acquired companies’ combined revenue for the fiscal year through March came to between ¥1 billion and ¥2 billion. The acquisitions were of Altis Co., a recycler; Humalabo Corp., which makes antiaging cosmetics and dietary supplements; and News Chef Inc., which makes microwave-safe food containers.

      Enlarge Image

      A model applies skin cream made by Humalabo in a screengrab from a TV ad for the anti-aging product. Humalabo, which makes anti-aging cosmetics and dietary supplements featuring bacteria extracted from shiitake mushrooms, was acquired by Olympus.

      The acquisition prices raised flags in recent months with Michael Woodford, who was CEO until he was fired Friday. Olympus said he was relieved of his CEO and president positions because of differences in management style. Mr. Woodford said he was fired after raising questions about acquisitions and calling for the company’s chairman to resign.

      Olympus on Wednesday also confirmed it had paid a total of $687 million to a financial adviser on the 2008 acquisition of U.K. medical-instruments company Gyrus Group Ltd. for $1.92 billion, a transaction Mr. Woodford also had flagged. Of that total, Olympus said it paid about $67 million, plus preferred shares that were priced around $177 million at the time of issuance. Olympus later bought back the shares for $620 million after their value had increased, the company said.

      Olympus’s shares have dropped 44% since Thursday, following a 2% decline Wednesday in Tokyo.

      Regarding the Japanese deals, Olympus said an outside adviser, which it declined to name, had valued the three Japanese companies as much as 79% higher than what Olympus paid. Olympus said it had bought the companies to try to expand into new businesses, a strategy the company has been pursuing for decades. Olympus said it had to write down about ¥56 billion of the companies’ value in 2009 due to a “worsening external environment” following the global financial crisis.
      Read More

      Japan Real Time: Olympus Execs: The Way We Were
      More on Japan Real Time
      WSJ Topics: Michael C. Woodford

      A peek inside the nondescript Tokyo office building that the three Japanese companies share with units of Cisco Systems Inc. and a Catalonian government agency shows how far removed the firms are from their parent.

      The three were part of a group of companies bought since the early 2000s, when Olympus set up a division to acquire start-up businesses. The trio are overseen by Olympus’s new-business division, an Olympus spokesman said. Olympus Executive Officer Hitoshi Kawada sits on the boards of all three units.

      Executives at the three companies said in an interview that they were surprised to find their businesses under a sudden spotlight, adding that it was the first time they were speaking to the media. The three executives appeared together and laughed as they referred to themselves as “brothers.” They said they joined their respective companies after they were acquired by Olympus and don’t know about the deals. Nor do they see much synergy between the cameras and endoscopes for which Olympus is known and products like antiaging cream or plastic food containers.

      “I feel all this talk [about us] is about a completely different world,” said Koichiro Hayashi, a News Chef general manager. “Since our businesses are unrelated, it doesn’t really mean anything to our average customers by telling them that we are subsidiaries of Olympus.”

      News Chef, with around 30 employees, describes its line of microwave-safe containers as “containers that breathe.” It introduced its soup stock—appropriate for Japanese dishes like sukiyaki, sliced beefand vegetables—on the day Mr. Woodford was fired. Teikoku Databank estimated the company lost ¥2.2 billion in the latest fiscal year on revenue of ¥600 million. Olympus and the three companies declined to provide financial results for them.

      Humalabo, which makes face cream from such ingredients as shiitake bacteria, charges as much as ¥70,000 for its most expensive package of 60 portions. It also sells the Ageless line of cosmetics, which includes hair- and skin-care products. Teikoku Databank estimated that Humalabo booked a pretax loss of ¥1.6 billion on revenue of ¥900 million in fiscal 2011.

      Altis, the recycler, logged an estimated ¥700 million loss on revenue of ¥210 million, according to Teikoku Databank. Founded in 2005, Altis mainly offers services to recycle plastic waste from medical facilities and industrial plants.

      Write to Juro Osawa at

      Corrections & Amplifications
      Olympus paid $687 million to a financial adviser for the acquisition of U.K.-based Gyrus Group Ltd. An earlier version of this article incorrectly said the payment was ¥68.7 billion yen.

      • So, as CEO of the company you ask yourself “why do I have 3.9 billion yen of losses on 1.7 billion yen in revenue in this part of the company this year (2011)?” You go look up what they are and find out that the company wrote down nearly 75% of the acquisition the quarter that it closed the deal (and based upon the numbers, it needs to write down more). Yeah, I think I’d be asking questions, because you can’t run a company and “cut losses” without knowing the answers.

        It’s starting to look like Woodford actually has a personal case against the Olympus board. He was clearly not expected to, nor allowed to, perform the full duties of CEO. When he tried to, he was fired. That’s actionable here in the US, not sure about Japan.

      • cL

        Thanks gianca for the article, though usually for a subscription site, you’ll cover yourself by quoting it rather than cut and paste the entire article, since the article is not in public domain nor it is free.

        That said, the articles provided indeed make Olympus operation look suspicious. There is nothing wrong with buying unrelated businesses, but the sum it pays for them are a little overvalued. We haven’t seen something like this since bust (because the entire economy was irrational). I do see there is a case. Though I think Woodford’s intention is to get his job/life back, isn’t he?

        I do have a question. Is the Gyrus acquisition fair valued or is it merely the fee that pays for the financial service that’s over paid? Is AXAM a real business that actually provided services, but liquidated itself after the Olympus deal, or put it bluntly, Olympus got scammed by a fabricated company and managements got embarrassed so did their best to cover everything up (and hoping the scandal will not burst, until Woodford came along). The yasuka involvement story can still be valid, but let’s consider the more possible scenarios first.

        • > Though I think Woodford’s intention is to get his job/life back, isn’t he?

          We don’t know what his intention is. It really doesn’t matter. Trying to rag on Woodford or ascribe motives to him is just another form of “shoot the messenger.”

          > Is the Gyrus acquisition fair valued or is it merely the fee that pays for the financial service that’s over paid?

          The Gyrus acquisition had a multiple above its stock price at the time, but that’s fairly normal in acquisitions. Some say Olympus overpaid, some say the cost was within reason. But the cost of acquiring Gyrus hasn’t been questioned in this case. It’s merely the fee paid to an unknown consultant for unknown information and approved verbally without due diligence that’s in question. (There are four problems for Olympus in just that last sentence. Four.)

          > Is AXAM a real business that actually provided services,

          Unknown. No one has been able to identify either the people involved in that business or what services were provided, if any. The latest release of information from Olympus itself seems to verify that, by the way: they don’t know.

          > but liquidated itself after the Olympus deal,

          It didn’t liquidate itself. It disappeared. It failed to file required paperwork and fees in the Cayman Islands to keep it an active company. If you know anything about the Cayman Islands, those are relatively trivial things to fail to do.

          > or put it bluntly, Olympus got scammed by a fabricated company and managements got embarrassed so did their best to cover everything up (and hoping the scandal will not burst, until Woodford came along).

          In order to be “scammed” Olympus would have had to have something represented to them by AXAM. The simple fact of the matter is that it appears that their involvement changed over a period of time (the fees changed, the task they were supposedly hired to do changed, the structure of the payment changed). For that to happen would mean that someone at Olympus–and all fingers point to the very top–would have had to be engaged with AXAM and approve. The approvals were said to be verbal, and despite this being the third time questions have been raised about it, there is still no disclosure by Olympus. The first time it was questioned, by Olympus’ auditor, the auditor was fired. The second time it was questioned, by Facta, it was ignored. The third time it was questioned, by Woodford, Woodford was fired. At this point, the investment community is questioning it, and it’s reflected in the stock price.

          What we’re seeing from Olympus management right now is what I call the “hidden walk of shame.” We’ll see some minor admissions, maybe a scapegoat, eventually some retirements and resignations. At some point, some new face at the top will proclaim that all this is now a thing of the past without revealing what actually happened. If it’s all convincing enough, the stock will slowly recover. Thing is, though, Olympus still needs to do what Woodford was brought in to do: fix underperforming divisions and get the financials where they should be for a company that dominates its major market.

          Oh yeah, and they still have those three silly acquisitions they made that are leaking over a billion yen a year and have no real relationship to the company’s core.

  • gianca

    So if you ever wonder what happened to the research budget for the new four thirds pro camera, it’s true… it has been been diverted to “containers that breathe”, “soup stock” and “anti-aging cosmetics and dietary supplements featuring bacteria extracted from shiitake mushrooms”…
    This is rich.

    IMHO what suffered the most on this affair is Oly brand reputation, which has suffered a blow more serious then its stock market.

  • seo

    Hi! I’m at work browsing your blog from my new iphone! Just wanted to say I love reading through your blog and look forward to all your posts! Keep up the outstanding work!

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