Nikon issued a little-noticed renewal statement about its financial condition earlier this month. There are some interesting comments in it. For example:
- The goal for the current fiscal year is to lower the break even point. That's corporate code for downsizing, plant consolidation, and lower capital expenditures. The Precision division seems to be the biggest target of this, but one has to wonder how it is impacting Imaging. Nikon's direct statement on that is "establish a production structure better able to withstand further appreciation of the yen." That's code for more lens production in SE Asia, and perhaps even less production at Sendai (which currently makes the D3s, D3x, and D700 models).
- "Nikon anticipates...the yen will continue to rise [until] March 2012." The yen has already risen over 5% from Nikon's last predicted figure for the current period. Bottom line: price increases are ahead (Canon is about to raise prices 10% in the US on lenses, more on accessories). And those price increases may be substantive if Nikon doesn't get the production costs down.
- Nikon believes that they will be unprofitable during this fiscal year, partly due to "intense competition." They believe they will return to profitability next fiscal year (April 2010 to March 2011). Given that Imaging now dominates Nikon's profitability results, that's tantamount to saying that no cameras between now and at least mid 2010 are going to turn the profitability around.
- Take a look at this Nikon information page. While listed as updated, most of the things on this page were published over a year ago. A couple of annotations I have:
- Note the dip in the Shipments of DSLR Cameras market share that was boosted back up to 40% in 2007 (mainly by the D3 and D300). I've written elsewhere about the dips Nikon goes through between pro generations. We're in another one right now. My calculation is that Nikon's current quarterly market share is back down to just below 33%.
- Note the strategy bullets. While there's a commitment to reduce compact camera lead time, there is not one for DSLR or lens lead times. Thus, I still don't expect a D4 until 2011. Second, note that nowhere in that strategy are customers really addressed ("to satisfy customer needs" sounds a bit like feeding cattle to me, not really listening to the customer, and "marketing practices in line with regional characteristics" was first written 18 months ago and has yet to actually turn into anything visible). Now go back and read some of the things that came into my In Box in a matter of hours above. See any problem? I do. Nikon thinks that they can just develop technologies to get their way out of their problems. I'd argue that their customer relationship is dragging and will continue to drag them lower than they would otherwise have gone on the financial side.