Following the accounting scandal that saw former CEO Michael Woodford ousted, Olympus’ coffers were looking decidedly empty; at that point, many potential suitors were rumoured. It turned out that Sony was the one whose offer was accepted. In a share transfer and cash deal – completed about a month ago – Sony pumped US$645 million into the company, to hold a total of 11.5%. What’s more interesting is that on most of the major business sites, this wasn’t reported as a transaction to invest in the cameramaker; rather, Olympus was frequently referred to as a ‘world leader in medical imaging’.
Although photographers know and love Olympus as the manufacturer of various quirky cameras and small systems, the truth is that margins in the medical industry – anything with ‘surgical’ or ‘medical’ in its name means an extra couple of zeroes on the end of the price tag – are much, much higher than the camera business. Like Nikon, it’s been making a good chunk of its income from something other than cameras for a long time. (I don’t know how much it makes from dictaphones these days, though.)
I’m going to take off my photographer hat now and wear my analyst/ M&A/ consultant one, for a bit of change of pace. Let’s put the pieces together.