Nikon Lost in Hall of Mirrors

Nikon Lost in Hall of Mirrors


June 19, 2014 6:26 a.m. ET

Nikon is a laggard in mirrorless cameras like this Panasonic model Bloomberg News


To turn its luck around, Nikon 7731.TO 0.00% needs to start breaking some mirrors.

That’s not normally thought of as a way to good fortune, but mirrors—specifically, the ones that add bulk to its high-end single-lens-reflex cameras—are one of Nikon’s biggest problems right now.

The digital camera market is in sharp decline as smartphones spread. Compact cameras have been hit hardest, but Nikon’s professional-grade cameras are also suffering.

The market shows growth in just one category: “mirrorless” cameras. They are smaller and cheaper than DSLRs—which use mirrors to reflect images onto the camera’s sensor—but like them offer high image quality and the versatility of interchangeable lenses. For consumers, mirrorless models make for a good upgrade from a smartphone camera, without breaking the bank.

In the first four months of this year, shipments of mirrorless cameras by Japanese companies were up 12% from a year earlier, according to the Camera and Imaging Products Association. Measured by revenue, mirrorless sales globally were up 39%, likely due to a shift toward higher-end models. Over the same period, shipments were down 42% for compact cameras and 17% for DSLRs.

Nikon was the last of major Japanese makers to release a mirrorless camera, and still offers only a handful of models. The company likely fears cannibalization of its high-end DSLRs, but its strategy seems not to be working. Nikon’s camera division, more than two-thirds of the company, posted a 9% revenue decline for the year through March. As a company that weathered the transition from film to digital, it should know better than to stand against the technological tide. Sony,6758.TO +0.23% Olympus and Panasonic 6752.TO +1.45% are leading in the new field.

Nikon’s solution to its flagging stock price—down 35% over the past year—seems rash. Incoming chief executive Kazuo Ushida said the company plans to dive into medical equipment, in which it has no expertise, and has earmarked $2 billion to acquire companies in this space over the next three years. But Nikon may have missed the party. Several other Japanese companies, including Hitachi6501.TO +0.27% and Toshiba6502.TO +1.96% have expressed medical ambitions, while rival Olympus is already a global leader in medical imaging, as well as in mirrorless cameras.

At 14 times forward earnings, in line with its average over the past four years, Nikon’s shares hardly seem a bargain. To revive its image among investors, the company needs to focus on making cameras that consumers actually want to buy.



About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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