|Credits - koshirokun/deviantart|
Nikon - a company with a history of a hundred years is probably one of the most house-hold names in the photography business , the company , which started out as a optics manufacturer has now expanded to making lenses , other optics for weapons ,binoculars and precision equipment for medical , semiconductor and engineering fields as well ,therefore the sudden press release from Nikon stating a "Recognition of Extraordinary Loss" might bring a sudden shock and even a mini heart attack to some , but should you actually worry about this ? lets take a look .
Notice of Recognition of Extraordinary Loss
Quote - As announced in “Notice of Restructuring” released on November 8, 2016, Nikon Group is currently under a fundamental company-wide restructuring to improve its corporate value as shifting from a strategy pursuing revenue growth to one pursuing profit enhancement.
In accordance with this restructuring, the Group recorded extraordinary loss of 29,790 million yen, mainly incurred from inventory write-downs/write-off in Semiconductor Lithography Business, as restructuring expenses for the nine months ended December 31, 2016.
This is probably the biggest bombshell to hit the interwebs from the company , apart from the cancellation of the Nikon DL camera lineup . The statement , which is described as an accounting term describes a financial loss which was not expected by the company - basically a bigger loss than expected .(Watch Tony Northrup's video below)
Although Nikon is mostly known to produce cameras , their Semiconductor Lithography Business was a major cash cow for the company as well . The process of Semiconductor fabrication (designing microprocessors for electronics) involves a step where a chip design is etched into a silicon wafer coated with a special substrate . this etching involves focusing the film through a uv light and a lens ,but sadly due to internal issues of write-in's and off's and a slightly smaller market in 2016 , the company has therefore attributed a majority of the 29 billion Yen loss on its Lithography division*
Quote -Expenses related to the solicitation for voluntary retirement are expected to be approximately 16.7 billion yen and will be recorded in extraordinary loss for the fourth quarter of this fiscal year. The impact of this solicitation for voluntary retirement on the business performance has been reflected in the consolidated financial forecast for the fiscal year ending March 31, 2017, as announced today in “Revision of the Financial Forecast for the Fiscal Year Ending March 31, 2017.”
In order to lower the headcount , Nikon has set up a voluntary retirement program to reduce its worforce by 1000 persons by 31st March , 2017 . The plan , which unlike a "laid off" program , gives the opportunity for workers with 5 years of experience to retire from the company with no hard feelings if they are able to find another employment avenue . This however might have some impact on Nikon as employees who may have good experience might decide to take the quit rather than a lesser experienced worker if there is a demand from rival industries .
Forecast for March 2017
Quote - Regarding the consolidated financial forecast for the year ending March 31, 2017, despite the continuous boom in sales of FPD Lithography Systems in the Precision Equipment Business, consolidated operating income as a whole is expected to fall below the previous forecast, impacted by the sluggish and shrinking markets of digital cameras in the Imaging Products Business and industrial metrology equipments in the Instruments Business.
As announced in “Notice of Restructuring” released on November 8, 2016, Nikon Group is currently under a fundamental company-wide restructuring in order to enhance our ability to generate profits and create value. And an extraordinary loss of approximately 53 billion yen in total, including the expenses related to “Result of Solicitation for Voluntary Retirement” and “Notice of Recognition of Extraordinary Loss” released today, is expected to incur as restructuring expenses, which is 5 billion yen increase from the previous estimate of 48 billion yen in “Notice of Restructuring” released on November 8, 2016.
In summary , Nikon's financial forecast for its fiscal year in 2017 (March 31'st) is as expected . The company , which is going through major changes in structure and product lines expect more direct hits in the form of drop in stoc ( Nikon's stock dropped 14.6% on Valentine's day -Following this report) and this combined with the reconstructing efforts (which cost millions of more Yen ) might mean that Nikon might continue to axe a few "less profiting" businesses off .
What does this mean for Nikon Cameras
This however does not mean that Nikon's camera business is profitable either . The company , along with other camera manufacturers including its arch rival - Canon are in the same boat when it comes to camera sales as one device has basically wiped out a large portion of the market in less than 10 years - yes ..if you guessed the "smartphone" as the answer , then you are right !
The smartphone - which basically became a commodity in the modern age thanks to Apple's efforts in making it a device for all and a jack of all trades has affected basically every company and profession with deep historic roots . From commerce to communication and travel , the little device slowly made major changes to the industry and since 2010 , they started to change one of mankind's greatest innovations - the camera . At first , the smartphone camera sensor was usually laughed off at as they were usually of poor quality and had very little capacity to produce a usable image . But as sensor technology improved , these cameras slowly took out their aged CCD based compact cameras as carrying around a second device for pictures was just not practical for all . Fast forward to 2016 , we have devices capable of 4K video recording , RAW image capture and even manual controls for some - this ,combined with the millennial's obsession of apps (myself included) has made cameras seem ancient as they are not intuitive as a "fun" app filled smartphone which allows you to share on social media in a jiffy .
Therefore ,owning a dedicated camera to shoot just photos may not appeal to a regular Jane or Joe .Camera makers who made millions on compact cameras were probably unable to reel from the shock these pocket rockets put up since making quick decisions in large companies takes many months and years as the research and development would need to be shuffled back to respond to a industry that outgrew everything else .
Although the smartphone has basically nuked the compact camera from making any significant goals in the industry , there is still hope for the interchangeable lens camera as that market is still steaming forward . Nikon , which probably saw the DL lineup as another "least profitable" division has officially scrapped the lineup which is probably be a good decision in the long run as they can now focus on the ILS systems more (Nikon's Keymission action cameras might also face some "changes" too ) . The ILS camera business - which comprises of the Nikon 1 and the D lineup might see a shuffle here and there and a few - more focused models down the line rather than a small chassis design change (cough cough ..D3400 , D5600 ) .All in all , Nikon will continue to make cameras . They will continue to make DSLR's until the mirrorless craze takes hold . They will also make everything else Nikon too , but with 100 years (almost) successfully completed. the company will find itself catering to smaller crowd who would demand more from their camera , if Nikon were to go a decade beyond 100 years as a independent company , they would probably have to make even more changes with some ending up as headlines as scary as this one .
Nikon/Voluntary retirement notice
Notice of Recognition of Extraordinary Loss