Olympus admitted today that its top executives used dubious acquisitions to sweep 20 years of massive losses under the carpet. At a press conference in Tokyo, new President Shuichi Takayama revealed that the 2008 acquisitions at the center of the company’s ongoing scandal were used to cover-up failed securities investments dating back to the early 1990s. Michael Woodford, the ex-CEO who brought the acquisitions to light, says that further inquiry is needed and that the company leadership needs to be purged:
This is a very big day. The big questions now are: who helped us – which outside companies? And what monies have they received? [...] The position of the board and non-execs is untenable now.
The news immediately crushed Olympus’ stock, causing it to drop 29% in one day. The company has lost 70% of its market value since the scandal began in mid-October and is now facing major consequences — including the possibility of getting delisted from the Tokyo Stock Exchange.
Image credit: Chalk Farm Banksy by grahamc99
After arriving late to the digital photography party, Kodak took another step away from the market yesterday by selling off its sensor business to CA-based firm Platinum Equity. The sale of Kodak Image Sensor Solutions (KISS) — which includes the company’s 263,000 square foot facility in Rochester — will hopefully give Kodak the boost of cash it needs to avoid bankruptcy and turn into a healthy business. Kodak sensors are found in a number of popular cameras, including the Leica M9 and S2.
The company is also looking into selling a chunk of its patents to raise more cash, which will help it in its current efforts to transform into a printer and ink company.
(via Business Wire via 1001 Noisy Cameras)
Jake Adelstein at the Japanese Subculture Research Center has written up an interesting article regarding the ongoing Olympus scandal, focusing on the organized crime allegations that have been brought against the company:
In year 2008, something happened at Olympus that turned the company from an entity focussed on seven major business areas, into a company completely out of focus, blurred by a total of seventeen business areas, to include real estate, investments, consulting, waste disposal, labor dispatch, and running travel agencies. Igari Toshiro, former prosecutor turned anti-yakuza crusader, who was Japan’s greatest expert on white-collar organized crime aka the keizai yakuza (経済ヤクザ）and many veteran organized crime detectives have stated that one of the first signs that a company has been infiltrated by anti-social forces is a sudden and totally new change in company direction–especially into areas like waste disposal, labor dispatch (temporary staffing), and real estate—all areas where anti-social forces have carved out a large niche for themselves.
Just days after being fired, former Chairman Michael Woodford was quoted as saying, “There were $800 million in payments to buy companies making face cream and Tupperware. What the hell were we doing paying $800 million for these companies?”
OLYMPUS: Bringing It Into Focus [Japan Subculture Research Center]
Image credit: OLYMPUS PEN E-P1 by sinkdd
Last Friday, we reported that Olympus had fired CEO Michael Woodford, claiming that he clashed with the company’s 92-year-old management style. Woodford is now coming out with different story: he believes that he was dismissed after raising questions about $1+ billion in payments the company made in acquisitions between 2006 and 2008. The Financial Times writes,
Mr Woodford [...] had been pressing other directors since July to explain payments related to the 2008 purchase of Gyrus [...]
Olympus’ own auditors had privately identified problems with the Gyrus transaction, the documents show. KPMG, Olympus’ auditor until 2009, said in an internal report dated March that year: “In our opinion proper accounting records have not been maintained.”
Olympus replaced KPMG as its auditor when its contract ended two months later.
Mr Woodford stressed that he had seen no evidence that Olympus executives benefited improperly from the acquisitions. But he said large amounts of money seemed to have “disappeared” into the hands of poorly vetted outside financial advisers and investment vehicles.
According to BusinessWeek, Woodford has met with the U.K. Serious Fraud Office to request that they investigate the acquisition. Olympus is also considering suing Woodford for leaking internal information to the press.
Ex-Olympus chief questioned payments (via 4/3 Rumors)
Olympus fired CEO and President Michael Woodford today, causing the company’s stock price to take a 17% dive. The 51-year-old Briton was accused by the board of ignoring the management culture that the firm has had in place for 92 years. Chairman Tsuyoshi Kikukawa (who replaces Woodford) says,
We hoped that he could do things that would be difficult for a Japanese executive to do, but he was not able to understand that we needed to reflect the management style we have built up since the company was established 92 years ago, as well as Japanese culture.
The “difficult things” included ambitious cost-cutting plans, which proved to be successful in the company’s European division. Woodford had a habit of ignoring the management structure of the company by giving direct orders to employees rather than the leadership of the different units. While Olympus is known in the consumer electronics industry for its digital cameras, it’s medical equipment that keeps the company afloat — the Olympus camera division lost 15 billion yen (~$195 million) in the year to March 2011.
Olympus fires British CEO, a self-confessed loud-mouth [Reuters]
Thailand is experiencing the worst flooding it has seen in more than 50 years, and Nikon is also getting hit hard. A statement released by the company today (and photos emerging from the area) reveals that the company’s entry-level DSLR factory there is now swamped with water:
The 1st floor of all buildings at the premises are presently submerged. Details of the damages are now under investigation. [...] We are continuing to investigate details of the damage, but are unable to predict how soon operation will be resumed. We will set up our recovery support system and endeavor to restart its operation as early as possible.
This may lead to a shortage in supply and an increase in prices — the same thing we saw after the massive earthquake and tsunami in Japan earlier this year.
Notice on the damage from the flood in Thailand (via Nikon Rumors)
Image credit: Photograph by Noppatjak Attanon and used with permission
Kodak’s stock plummeted again today, losing nearly 50% of its value and closing at $0.78 per share. The company was worth over $30 billion back in 1997, but todays stock price pegs the value at just $200 million. Prominent investors in the company are calling for its sale, but apparently there’s been hurdles in selling off its patent portfolio, and now bankruptcy might be on the horizon. A quote by a company spokesperson a couple days ago caught my eye: when asked why Kodak was struggling in the digital market, the response was,
We have one of the leading digital camera line-ups, including top-selling pocket video cameras with differentiated features, and a wide range of digital cameras that feature the unique “Share” button.
That kind of explains things, doesn’t it? The end appears to be very near…
Everpix is a new company that wants to make your entire photo collection — both online and offline — accessible from anywhere through the cloud. Introduced yesterday at the TechCrunch Disrupt 2011 conference, the service will come as a desktop client that monitors folders on your computer and photo sharing accounts on the Internet. Whenever you add new photographs, they’re automatically beamed to the cloud (i.e. Everpix servers), allowing images created using many different devices and stored in many different places to be available in one central location. Even photos emailed to your through Gmail can be picked up and back up by the service.
We reported yesterday that Kodak has taken defensive measures to prevent a hostile takeover for its extensive collection of digital imaging patents. One of these patents is an image previewing invention that has earned Kodak nearly $1 billion from Samsung and LG, and that’s at the center of an ongoing legal battle with Apple. With the income generated by patent lawsuits dwindling, the company is now considering the sale of 1,100 patents (about 10% of its portfolio), including the valuable image previewing patent. A sale might bring in significantly more cash than the market value of the company, which currently sits at about $600 million.
Image credit: FOR SALE BY OWNER (if you can find it) by The-Tim
Facebook can’t be too pleased with Google right now. In addition to releasing a Facebook competitor called Google+, the company has also beaten Facebook to the mobile photo sharing space with a new app called Pool Party. Like Google+, the app is currently invite-only, but if you can score an invite it’s a free download for both iOS and Android. The app is based around collaborative group albums called “pools” that allow you to share pictures with friends and family in real-time.