A year of whistleblowing scandals, resignations, lawsuits and loss-making acquisitions has taken its toll on Olympus’s finances. The Japanese camera and medical equipment maker has forecast a 32bn-yen ($412m) loss for the year ending March 31, after haemorrhaging cash for many months.
Between October and December of 2011 Olympus reported a 756m yen loss, compared to 2.04bn yen profit the year before. The fall in fortunes is mainly due to its poorly performing camera business, which has struggled to compete in an overcrowded market. The endoscope business, of which Olympus has a 70% market share and is worth around $12bn, remains the company’s bright spot. Operating profit in its medical business was up 18.87bn yen during the quarter, compared to the same period in 2010.
Olympus President Shuichi Takayama said that he is not currently taking part in any discussions to tie up the company with another Japanese electronics firm. Olympus had considered bringing in a partner after a $1.7bn accounting scandal sent the firm plummeting into the red, and after a number of loss-making acquisitions also left the firm’s resources severely depleted. Sony and Fujifilm had been tipped as likely suitors, although Takayama stressed that any potential tie-up would have to wait until the annual shareholders’ meeting in April.
A number of dubious deals by Olympus were exposed when new Chief Executive Michael Woodford turned whistleblower in October last year. Woodford was sacked after questioning the company’s purchase of three loss-making firms, and after launching an investigation into fees of $700m for British medical equipment maker Gyrus. Olympus eventually admitted it had covered up 20 years of losses, and most of its board members are being sued – bizarrely, by themselves. All this is amidst rumours that criminal charges are going to be brought.
In the weeks after Woodford's sacking, Olympus’s shares lost 80% of their value. On Monday its shares finished trading in Asia at 1,282 yen – up 0.4% on the day, but that’s almost half what they were worth before the scandal emerged.
- For the full story behind Michael Woodford’s sacking see the March edition of MT, which is out in two weeks’ time.