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The Backstory to the Scandal That May Bring Down Olympus

The financial scandal rocking Olympus is one that the company may not survive. The company’s stock price plunged another 17% today, and the Tokyo Stock Exchange has informed the company that it will be delisted if it doesn’t meet a December 14th deadline for reporting earnings. The New York Times has a great piece on how Olympus got itself into this mess:

In June 1998, a disturbing rumor tore through trading floors in Tokyo: Olympus had suffered colossal losses on derivatives trading, punching a large hole in its balance sheet. The company’s shares spiraled down 11 percent in three days.

But Olympus categorically denied the rumor and went on to post record profits. All was well in the house of Olympus, the newly installed president, Tsuyoshi Kikukawa, assured investors.

Turns out the losses were in fact real. They were so colossal, however, that booking all of them could have pushed the company into bankruptcy. The management then decided to fudge their numbers in an effort to save the company.

Corporate Japan Rocked by Scandal at Olympus (via TOP)


 
 
  • ceedee

     how will there tools help me create my art.  the rest is unimportant to me.

  • ceedee

    Their tools I mean, there should be an edit function here.

  • Mikethompson

    Yeah, if there was, you could actually edit that to make sense.

  • Michael

    Maybe Sony will buy the company and improve their line of lenses for NEX cameras.

  • Ranger 9

    Although I’m not an Olympus fanboy, I have to figure that if their product line (which basically consists of nothing except flexible endoscopes and digital cameras) is strong enough to prop up such a long-term, deeply-based scam, it should be strong enough to make a nicely profitable company once the bleeding is stopped.

    However, investors and vendors might not be willing to allow enough time for that to happen. If that’s the case, I predict Olympus will keep the very profitable endoscope business (which commands 80% of the worldwide market share for such devices, if I remember correctly) and sell its camera brand name to some Chinese OEM.