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Nikon Stock Plummets 19% After Cutting Profit Forecast, Biggest Drop Since 1985

nikonstockfall

One of the big stories in the business world today was that Nikon’s stock took a historic fall of nearly 19%. The company is weighted so heavily in the Nikkei Stock Average that the news had a rippling effect across the market, causing most Asian shares to drop.

Businessweek writes that the price drop was the largest single day decline in Nikon’s stock since 1985. It happened after the company cut its profit forecast due to decreasing demand and plummeting prices.

For the fiscal year ending in March, Nikon now predicts that it will pull in roughly $407 million in net income, down from the ~$643 million it had previously forecast.

Nikon expects to sell 7 million DSLR cameras (down from its previous forecast of 7.1M) and 9.8 million lenses (down from 10M). Its forecast for compact camera sales remains unchanged at 17 million units.

Both DSLRs and compact cameras are losing ground as consumers turn to smartphones and mirrorless cameras

Both DSLRs and compact cameras are losing ground as consumers turn to smartphones and mirrorless cameras

The company also paints a picture of how the digital camera market is currently doing. It says that demand for entry-level DSLRs is falling and that new entrants in the market are competing against the camera style. This naturally leads to falling prices as DSLR makers struggle to convince photographers not to purchase mirrorless cameras.

Canon and Nikon have both been slow to engage the mirrorless camera market, which has led to both companies being squeeze from both sides. Their compact camera sales are struggling due to the rise of smartphoneography, and now mirrorless cameras are chipping away at their DSLR dominance.


Image credit: Photo illustration based on Tokyo Stock Exchange by Dick Thomas Johnson, He’s Got the Compact by garryknight


 
  • http://www.oldworldcreative.com Evan Skuthorpe

    ‘Profit’ is no doubt down also due to the large number of new cameras Nikon launched recently…

  • http://www.facebook.com/sin3rgy David Liang

    Yeah definitely, it’s not until mid to late term of product life cycles do they really turn a profit. Better manufacturing processes and less defects leading to higher efficiency and profit. Man sad news about Nikon though I think they really put out some quality products in 2012.

  • Guest

    Ugh. Seriusly? “smartphoneography”???

  • http://www.facebook.com/stephan.haggerty Stephan Haggerty

    Ugh. Seriously? “smartphoneography”???

  • Trey Mortensen

    It’s like that article a while back, if you don’t adapt with the times, you’ll end up playing catch up. Why don’t brands like Canon and Sony who make sensors, get into the smartphone segment by trying to sell their sensors. I could see great marketing with a smartphone that has a Canon senor in it.

  • http://profiles.google.com/ksuwildkat Rob S

    I dont know how the M43 crowd is going to survive. For all the mirrorless hype i rarely see one “in the wild” but constantly see them being sold at fire sale prices. $300 will get you last years Panasonic with a lens. Sigma recently ran a “Two for $200″ special on lenses. Tells me M4/3 has jumped the shark.

  • aminucyrus

    Hello, Sony is the largest sensor supplier in the world with customer’s from Nikon to Apple.

  • John R

    Nikon needs to understand that people who buy say, a V1, are also the same people who by a D800. True, some of them will stop at the V1, but owning a V1 will not prevent the sale of a D800. What’s my point here? Make your low end cameras as good as you can. The V1 would be great with 14bit RAW and fast wide angle lenses, but Nikon have semi crippled the CX format with reduced specification.

    Recently I used a GoPro Hero Black 3 and a V1 on a scuba trip, two disruptive cameras. The Nikon won hands down for reliability and picture quality, proving to me that the old guys sometimes know best. But the Hero 4, who knows, maybe they’ll nail it. But in the meantime, if Nikon produce the goods they can take market share.

    Finally (at last) the last Nikon lens I bought was the 24mm f1.4, a lens so great that I wonder if I’ll need another lens. Just kidding! There is always another great lens needed. Think fast glass and Nikon will do well, think twenty identical compact cameras and a slow mid-range zoom and it’s doomed. Stand above the crowd, I think it was a Google guy who said that to succeed you need to be 10x better than your competitors. The D800 is that camera.

  • jsthejus

    canon is doing better….

  • jsthejus

    can you explain how that logic works in your world?
    it´s not the first new camera generation nikon makes……

  • http://www.oldworldcreative.com Evan Skuthorpe

    “In my world”? Jeez, calm down buddy.

    In “the real world”, development and marketing of new products costs a lot more than coasting along on an old product line that has paid for itself many times over… Hence it eats into profits.

    The point is Nikon hasn’t necessarily lost money, it’s just spent more profit than normal.

    Got it? Hope so.

  • jsthejus

    im asolutely cool kid…. but your talking nonsense….

  • http://www.oldworldcreative.com Evan Skuthorpe

    Are you high? People hold off buying old gear knowing that new gear is just around the corner and so profit dips. It takes time to rise again as is the case when any new gadget is released – Be it consoles to cameras to TVs.

  • http://profiles.google.com/ksuwildkat Rob S

    Every company has a relatively static burn rate to pay for lights, payroll, routine administration. R&D is normally a reasonably static cost too. But the return on that R&D and normal operations is often tied to product cycle.
    Lets say burn for ACME Camera is $100 a day. If profit from each camera is $10 I need to sell 10 cameras to break even. But if its a brand new camera that uses a new tooling process I might only make $5 a camera. And if the new process takes longer or has a higher failure rate maybe I can only produce 25 cameras a day – just above break even. You still have to pay a full days wage for everyone whether they produce 25 cameras or 50. And on top of that I need to launch a marketing campaign to convince people that ACME Cam 2.0 is better than 1.0 so some of my “fixed” cost are going to increase.
    Look at video game consoles. Sony sells the PS3 for 1/3 of the introductary price today. Yet at intro they lost money on each system while now they make money on each one. Same product but no massive marketing campaign, cheaper parts prices and higher yield per hour of purchased labor.
    Pentax has been mocked/criticized for the unspectacular K-5 to K-5II product cycle but it has allowed them to keep the vast majority of the camera the same meaning they are getting the benefits of R&D that was paid back long ago. For that matter the foundation of the camera has not changed since the K-7. Same tools, same parts, higher yield, lower cost.

  • http://profiles.google.com/ksuwildkat Rob S

    Funny because one of the things that some people are starting to realize is that camera phone pictures suck. When Apple introduced the iPad with Retina display folks started looking at their iPhone pictures and thinking “man that is blurry.” Smart phones are going to kill off low end P&S cameras no doubt. But thats a crappy market to be in anyway. Inexpensive M43 cameras are going to kill off the super zoom market too. But if you want an excellent image there is no substitute for a bigger sensor, faster glass and the costs associated with it.

  • http://twitter.com/intensitystudio Antonio Carrasco

    THE SKY IS FALLING!!!! AHHHHH!!!!

  • http://www.facebook.com/profile.php?id=500022197 Ryan Oliver

    So I assume you shoot medium format?

  • http://profiles.google.com/ksuwildkat Rob S

    if only. I win the lottery and I am getting a Pentax 645. I win twice and I can buy some lenses for it

  • JumpedShip

    No surprises there. Nikon’s quality due to cheaply manufactured parts and components made elsewhere has caused Nikon to take a big nose dive for quality over the past 2 or 3 years. Have recently been selling off a greater portion of my Nikon gear and have made the switch to Canon and have not regretted it.

  • Frank McKenna

    Anytime your “struggling to convince your customers” not to buy something (in this case mirror less cameras) you are already losing. No wonder their profits have fallen by $250MM.