Photo finish: Crashing camera sales force Olympus to sell

Sometimes the vicissitudes of capitalism force companies to exit the businesses for which they’re best known. Olympus, once a leading light in the photography industry, is now joining that list.

On Wednesday the company said it planned to quit its 84-year-old camera business. The imaging giant, known for its once-pervasive digital cameras, agreed to sell off the declining unit by year’s end. Japan Industrial Partners, a private equity firm best known for buying Sony’s struggling Vaio computer line in 2014, agreed to purchase the business.

Terms of the deal were not disclosed.

A glance at Olympus’s financial statements provides all the rationale for the divestiture; as at rival manufacturers, camera sales have plummeted over the past decade. For the fiscal year ended March 31, Olympus’s camera unit declined 10% versus the year prior to ¥43.6 billion, or $407 million. The unit’s sales have collapsed by three-quarters from a decade ago, when the company brought in ¥175 billion, or $1.63 billion.

In 2007, Apple’s iPhone debut rang the camera industry’s death knell, though many people didn’t realize it at the time. As smartphones have improved their lenses, software, and image quality since, people have substituted them for stand-alone cameras. The floor fell out from underneath camera makers; digital cameras sales have fallen 87% since 2010.

The coronavirus pandemic hastened Olympus’s laggard camera unit’s decline. On June 17, the company noted that the spread of COVID-19 put revenues “on a downward trend.” No doubt the headwinds contributed to Olympus’s decision to sell.

The deal represents a win for ValueAct Capital, an activist investor that took a 5.5% stake in Olympus in 2018. The San Francisco fund had been agitating for Olympus to improve its financial performance, including by installing a new CEO, Yasuo Takeuchi, in 2019.

When rumors floated that Olympus might be exploring a sale of its camera business in the fall, the company first appeared to deny the reports. But Takeuchi confirmed the possibility of a spinoff to Bloomberg in November.

If the deal goes through, Olympus will concentrate on its remaining businesses, such as surgical equipment and medical devices like endoscopes. The company’s stock jumped as much as 7%, to $19, on the news.

Olympus’s exit follows similar ones by Kodak and Polaroid, two other iconic camera makers that called it quits on the business, preferring to license their brands instead.

Canon, Sony, and Nikon continue to slug it out.

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