Nikon President Eyes Smartphone Users as Compact Sales Fall

Nikon Corp. (7731) (7731) is looking at ways to tap smartphone growth as a slump in compact camera sales may lead to weaker-than-forecast earnings.

Point-and-shoot camera sales across the industry dropped about a quarter in April and May from a year earlier, President Makoto Kimura said in a July 4 interview at Nikon’s Tokyo headquarters, citing third-party research. Smartphone shipments jumped 46 percent last year to 722 million units, according to Framingham, Massachusetts-based IDC Corp.

“The number of people taking snapshots is exploding by use of smartphones that sold 750 million or so last year and are still growing,” Kimura said. “We’ve centralized our ideas around cameras but can change our approach to offer products to that bigger market.”

The company’s first quarter earnings estimates were set “fairly low” and the results will probably be close or “a little short,” saidKimura. Nikon doesn’t disclose quarterly forecasts and the executive declined to provide more details.

Nikon, whose Coolpix models are offered for as low as $55 online, projected in May a 53 percent gain in net income for the year started April 1, following a 28 percent decline in profit in the previous year.

Photographer: Kiyoshi Ota/Bloomberg

Makoto Kimura, president of Nikon Corp., holds a Nikon D4 digital single lens reflex (DSLR) camera as he poses for a photograph at the company's head office in Tokyo. Close

Makoto Kimura, president of Nikon Corp., holds a Nikon D4 digital single lens reflex... Read More

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Makoto Kimura, president of Nikon Corp., holds a Nikon D4 digital single lens reflex (DSLR) camera as he poses for a photograph at the company's head office in Tokyo.

The company, whose imaging division generated 84 percent of operating income last fiscal year, expects the compact camera market to shrink 12 percent in the current financial year, according to its May projection. High-end models with exchangeable lenses may gain 9 percent, the company said May 9.

The company doesn’t plan to change the forecasts, Kimura said.

Secret Products

Demand for Nikon’s high-end cameras, like the D4-SLR that retails for about $6,000, can help compensate for slower sales of point-and-shoot models at least for several more years, Kimura said, even as the company looks for new ways to generate growth.

Nikon’s imaging division and a new business team are working on products that are expected to be available in less than five years, according to the president.

“We want to create a product that will change the concept of cameras,” said Kimura. “It could be a non-camera consumer product.” The president declined to say if the company was developing a mobile phone.

Global shipments of compact digital cameras slid 48 percent in May from a year earlier, while more expensive single-lens-reflex sets, or SLRs, declined about 6 percent, according to the Camera & Imaging Products Association in Tokyo.

Photographer: Kiyoshi Ota/Bloomberg

Makoto Kimura, president of Nikon Corp. Close

Makoto Kimura, president of Nikon Corp.

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Photographer: Kiyoshi Ota/Bloomberg

Makoto Kimura, president of Nikon Corp.

“Rapid expansion of mobile devices is a change in business environment given to us,” Kimura said. “Our task going forward is to find an answer to that change.”

Medical Devices

Nikon may also consider expanding into production of medical devices and aims to start generating revenue within three years, Kimura said.

The move follows Canon Inc. (7751) and Sony Corp. which have announced tie-ups with hospitals and medical equipment makers as they search for growth. Rival camera maker Olympus Corp. (7733) is the world’s largest maker of endoscopes.

Kimura said Nikon hasn’t ruled out acquisitions to expand in medical business and there are no specific talks under way.

To contact the reporters on this story: Mariko Yasu in Tokyo at myasu@bloomberg.net; Grace Huang in Tokyo at xhuang66@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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