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Japanese Government Wants FUJIFILM to Buy A Stake into NIKON


Patrick FR

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I wasn’t aware that the Japanese Gorvernment or any other non communist government is able to ask a company to buy shares in another. Even more so if the company is “ suffering”. I thought the shareholders have way more to say about this and any company whose CEO would listen to the government rather than the economics is doing a BAD job.

 

I would say this is a hoax.

Edited by milandro
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The goverment often interferes with "private corporation" decisions.

 

Because when a private domestic corporation gets bought by a foreign corporation, the goverment is afraid that jobs will be moved to another country. Which is why the goverments always "talks" and try to influence decisions the market should make independently.

 

It's all about keeping jobs at home, and don't lose them to another country

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it happened in a EU country too. A failing airline was about to be bought by a foreign company, but the goverment put together a few people to save the "nationality"

 

now the airline failed

If about Alitalia, it wasn't a group of people. A little group only cashed a shameful bunch of money out of the people, who paid for "saving" the airline. Which has not happened. But that's the normality in italy.

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The jobs are not lost they are just shifted to another company. If NIKON should close down a plant or two maybe Fuji makes more camera and takes people on.

 

THIS is capitalism at work.

 

If I were the CEO of Fuji I would thank for the suggestion but tell the government that I am working for the shareholders not the politicians

 

By the way, there are VERY strict rules about State Support in the EU and this would for sure NOT be permitted.  The country in question  was admonished several times.

 

This is how SABENA died and we lost in Holland, FOKKER.

Edited by milandro
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The jobs are not lost they are just shifted to another company. If NIKON should close down a plant or two maybe Fuji makes more camera and takes people on.

 

If I were the CEO of Fuji I would thank for the suggestion but tell the government that I am working for the shareholders not the politicians

That's the point... jobs never get lost. Maybe they will make even more jobs. But not in Japan.

 

If H&M moves manufacturing clothes from USA to Bagladesh, jobs are not lost. They make many new jobs. Just somewhere else.

 

This is why it is normal that goverments look at the market development at their home, and try to convince companies to remain (sometimes helping financially... see FIAT)

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The Japanese society has never been ruled this way and this , I am sure, is an hoax. 

So far as I hear, Japanese countries are very proud to keep companies Japanese. So it's not unusual, at least for me, that the Japanese goverment moves, when they hear foreign companies try to put their hands on Nikon (because they are afraid to lose jobs)

 

Btw, the Japanese magazine is highly reputable. I hear even former Japanese prime ministers write for that magazine. So I think they are used to write well informed articles

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Patrick is right.

 

It's normal in Japan. Business is competitive but they do help each other out. Big brother business culture. As long as one isn't too cocky.....

 

For an icon business like Nikon, it's natural for the government to step in to try and help preserve a traditional Japanese name.

 

Nikon has contributed much to the photography world and I think some of their lenses are amongst the best there is. It would be a great shame to see them go.

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governments all over the world help big employers source finance, state interference involves using government (tax payers) money to help out private sector companies be it cash bailout or tax breaks that give them an unfair advantage.

 

The Japanese government is effectively trying to protect domestic jobs it is not proposing using tax payers money, it is looking to Fujifilm.

 

Fuji may look and see no benefit to them, however Nikon has a very large professional user base with world wide repair centres etc. Fuji may see some benefit into an investment into some of Nikon, or a potential merger.

 

Fuji invest $X and gains access to Nikons repair centres, perhaps Nikon release re-branded X mount cameras and Nikkor glass in X-mount.

 

Japan has Fuji, Nikon and Sony all competing in the camera market, however unlike other markets there is already cooperation between them, for a start they all use Sony sensors.

 

When was the last time a Ford car used a Vauxhall engine?   

Edited by Tikcus
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true, Fujifilm camera division is smaller than Nikons... but the company as a whole is way bigger, flexible and healthier than Nikon. As such, they for sure have the money needed to make investments.

 

If investing in Nikon is smart, well, I have no idea

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To assess the amount of capital that might be available (or not) to be invested by Fujifilm I strongly suggest re-reading the yearly report for the shareholders of the last few years published by Fuji.

 

Perhaps realism in this will finally kick in. The popular expression wishful thinking is an oxymoron.

 

https://www.fujifilmholdings.com/en/investors/annual_reports/2016/index.html

 

http://www.fujifilmholdings.com/en/investors/annual_reports/2015/

 

http://www.fujifilmholdings.com/en/investors/annual_reports/2014/

Edited by milandro
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if i read it right (it's late) that 2016 report advised net cash provided by operating activities before investments was 221.9 billion yen (approx. 2 billion US$) and an overall cash pile of 600.9 billion yen (approx. 5.5 billion US$)

 

 

 

"Cash Flow Analysis Net cash provided by operating activities totaled ¥221.9 billion, primarily due to the increase in net income and other factors. Net cash used in investing activities amounted to ¥155.7 billion due to purchases of property, plant and equipment, acquisitions of businesses, and other factors. Thus, free cash flows—or the sum of cash flows from operating and used in investing activities—resulted in cash inflows of ¥66.2 billion, down ¥77.0 billion from the previous fiscal year. Net cash used in financing activities amounted to ¥171.7 billion, due primarily to cash dividends paid to shareholders, purchases of stock for treasury, and other factors. As a result, cash and cash equivalents as of the end of the fiscal year under review amounted to ¥600.9 billion, down ¥126.0 billion compared with the end of the previous fiscal year."

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The trend though (for example the last quarter of 2017) is not so great. 

 

 

Revenue

During the third quarter year to date of the fiscal year ending March 31, 2017, The Group recorded ¥1,702.9 billion in consolidated revenue (down 7.5% from the same period of the previous fiscal year), reflecting such factors as the negative impact of yen appreciation (¥140.0 billion), while the sales of such businesses as flat panel display (FPD) materials and electronic materials increased.

Income

Operating income totaled ¥114.1 billion (down 14.8% from the same period of the previous fiscal year), reflecting such factors as the negative impact of yen appreciation (¥30.7 billion), while the improvement of profitability in each business continued. 

 
 
 
Outlook
 

Regarding consolidated performance in the fiscal year ending March 31, 2017, the Company keeps its forecasts unchanged of ¥2,400.0 billion in revenue (down 3.7% from the previous fiscal year), operating income of ¥192.0 billion (up 0.4% from the previous fiscal year), income before income taxes of ¥192.0 billion (down 1.3% from the previous fiscal year), and net income attributable to FUJIFILM Holdings of ¥112.0 billion (down 9.2% from the previous fiscal year).

The projected currency exchange rates for the U.S. dollar and the euro against the yen for the fourth quarter of the fiscal year ending March 31, 2017 are ¥105 and ¥115, respectively.

 
 
 
Edited by milandro
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Absolutely,

 

this “ thing” of FUJIFILM being asked by “ the Government” :rolleyes: ( as many said) to save NIKON has spread like wildfire on internet and after an initial report many have started questioning the whole quality of this news or more probably alternative news.

 

 

 

It is all based on secondhand reports and there are no primary sources other than a summary of an article on Sentoku which might be or not accurate and which veridical content (or translation) has to be verified.

 

 

 

The whole thing is also suspicious exactly because it supposedly comes from a politician.

 

 

The very act of publishing this new would only be used as a last resort because any court in the world would deem spreading such news as an unlawful act directed to influence the stock market.

 

 

Unless things have changed ( I have written as a journalist, professionally in the past, and still do although currently “ only” on a music magazine)  news should be considered unconfirmed if NOT corroborated by at least two independent (from each other) sources.

 

It's a good job that we are on Fuji “ rumors” since this is all this is. :ph34r: an unconfirmed rumor potentially very damaging for the Nikon stockholders.

Edited by milandro
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Patrick's blog this morning about competition, survival of the fittest, and should also consider government and other social "interference" in pure price/performance competition.

 

The United States' government brokered deals between GM, creditors, and labor to preserve jobs. US private banks had bad debt purchased by the government, too. This is the USA where competition is more free-market than a great many other countries.

 

Japan's government has a long history of interfering when struggling companies are at risk of either adding to unemployment or losing world market share in a favored industry.  The government will often aid in negotiating a merger, acquisition, or, if there is no other recourse, purchase the failing division from one or more companies and set up a government-run holding company.

 

Preventing large lay-offs and losing market share to another country are not the only types of interference with natural selection. Also, do not think for a moment Japan is the only country actively supporting favored companies or industries. Every developed country does this. The USA is one of the least interfering governments in its economy so companies often do go out of business and people think the government is passive. Most other countries offer more support to prevent job loss. Similarly, countries often offer massive support to industries they want to protect. Tariffs on imports, land grants, infrastructure (utilities and transportation), and even direct investment. In fact, I seem to remember a recent example in China where the government paid 3/4 the cost of building a new multi-billion USD factory. Developing and protecting key industries, whether agricultural or electronic, for jobs, national trade strategy, or reduced dependency on other nations happens all over the world more frequently than most people imagine.

 

Thus, a rumor that the Japanese government is investigating solutions to Nikon's problems, such as folding all, or part, of the company into Fujifilm, should be no surprise. Nikon is a large manufacturer with well-known branding and thousands of employees. If faced with insolvency, rather than face the horrors of closing multiple factories and offices, brokering merger into a well-performing peer may mean some jobs become redundant but that is better than losing all of them.

 

I have even seen the government collect money-losing divisions from several companies under joint leadership. The divisions are all spun off from their parents and reorganized, much like the US government purchasing bad debt.

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  • 3 weeks later...

As promised I have gotten my hands on the original Japanese article.

 

The most fascinating aspect of the original Japanese article is that it presents Fuji CEO Komori's words as a verbatim quote stating that they are going to take diabolical delight in propping up Canon's chief rival, Nikon, as vengeance for Canon's underhand dealings in snatching Toshiba Medical from them.

To avoid breaching copyright and to save myself time writing out the whole article word for word in another language I am going to present salient points (apologies if I've mistranslated marketing jargon as this isn't my forte...in any language):

Title: Fujifilm to Step In to "Save Nikon"

The enablers: Mitsubishi UJF Bank (BMTU) and the Ministry of Economy.

 

Camera sales are in decline due to smart phones. The most desparate aspect of Nikon is not just that they are in the red, but that their top line is sinking. Between 2013-2017 a 8.6% drop in earnings which can expected to sink further into 2018. A representative of Nikon's main bank, the BMTU, quoted as saying that they on a "negative spiral". Even it layoffs do help in the short term, unless the slide can be stopped, at this rate they will be back to square one in no time.

 

Nikon have expertise in optical semiconductors and if they go into decline this expertise may be snapped up by Chinese, Korean and Taiwanese investors.

 

Diversification into medical fields starting with optometry puts Nikon into a competitive field requiring investment in research and they remain in the red on this venture.

Nikon lack the resources to undertake the sort of large scale mergers and acquisitions that Canon have aggressively pursued.

 

Fujifilm are similarly diversified into medical and healthcare fields, though this is not the decisive reason for Fujifilm being the one nominated to step in.

 

In the bitter struggle to acquire Toshiba Medical, Fuji got beaten by Canon's use of underhand tactics of dubious legality, leading to outraged comments from Fuji CEO Shigetaka Komori. "If that's the case, we'll only be too happy to give Nikon a helping then" he said.

 

According to a BMTU representative, in a response from Fujifilm "things have not proceeded entirely as expected". The market capitalization of Nikon is around 680 billion yen. Even if the purchase premium were reduced to 30%, nearly 900 billion yen would be needed. Fujifilm HD has just spent about 155 billion yen in purchasing Wako Pure Chemical Industries, a subsidiary of Takeda Pharmaceuticals. Despite about 600 billion yen liquidity at hand, and net worth exceeding 2 trillion yen, Fujifilm "would probably be biting off more than they can chew" (according to the representative).

 

Problems related to accounting irregularities first reported from Fuji-Xerox New Zealand are not helping Fuji's financial situation.

 

Even if Fujifilm HD makes a move, "it would remain a subdivisional acquisition" according to industry sources.

 

Edited by Sator-Photography
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this “ thing” of FUJIFILM being asked by “ the Government” :rolleyes: ( as many said) to save NIKON 

 

It's fairly common for the Japanese government to be highly proactive in intervening in industry. The suggestion that this is totally unheard of simply isn't true at all. In this case, they want to ensure that Japanese patents and expertise remain in Japanese hands. 

 

As the photography industry becomes more specialised and high-end/enthusiast orientated due to the slow decline of the point and shoot camera, mergers and acquisitions in this industry become highly plausible. 

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