Visicalc Dreaming

(commentary)

Back in the late 70's we used to have a phrase for executives and middle managers who picked up Apple II computers and the first spreadsheet, Visicalc: Visicalc Dreaming. They would enter some data (not always the right data), make some calculations (not always accurate ones), and pronounce how great things were, or were going to be. 

I was reminded of that when Bloomberg published an article yesterday saying that Olympus will return to profitability in cameras next year.

Olympus's CEO Hiroyuki Sasa is said to have revealed several numbers in an interview with Bloomberg Japan reporters, though the only actual quote from Sasa that appears in the article isn't about actual numbers. Still, let's look at those reputed numbers:

  • 1m mirrorless camera sales. First, note the "as early as in the year starting April" qualifier. Good thing that's there, because assuming Olympus sells their predicted 660k units this year (which we won't know for another four months), that 1m number represents a 52% increase in unit volume at a time when every camera manufacturer is struggling to show any gain in unit volume with anything. Seems like a Visicalc dream to me. It's in someone's spreadsheet, so it must be true.
  • 5% market share. 1m units and a 5% market share means only 20m units will be sold. What market this refers to isn't specifically called out by Bloomberg. If it were mirrorless only, that would mean that the mirrorless market would be seeing nearly 200% growth and Olympus only 52% ;~). If it's all interchangeable lens cameras as seems to be implied, that would mean that Olympus would show 52% growth while all the other makers together showed 18% improvement. Again, seems like a Visicalc dream to me. The likelihood that the actual numbers will be what Bloomberg says Sasa said is far lower than the likelihood of most economists' GDP forecast spreadsheets for next quarter being right.
  • 7 billion yen profit. This is after 2.7 billion yen in loss so far this year, so a minimum of a 9.7 yen turnaround caused by 340k cameras. Each additional mirrorless camera sold therefore seems to be accounting for 28,529 yen profit (US$273). One correspondent suggests that Olympus' calculations are simply based upon their first half of this year's mirrorless results (average selling price of 72,800 yen, above CIPA average) and a 44% GPM multiplied by the number of new cameras they think they'll sell.  

These claims will go into my Claims to Remember page. Olympus projections in the past haven't proven to be very reliable.  

Every time I write critically about these soft news stories or optimistic projections I get slammed by folk who just want to believe that everything is rosy. The cameras Olympus makes—especially the OM-D models—are great. But I won't believe that Olympus' camera division is profitable and healthy until the numbers show that they actually are making money. The projections from them have been wrong far too often recently to tacitly believe them, not to mention that this is a company that lied about its financial situation for over a decade. The extreme growth that Olympus is now projecting for their m4/3 cameras flies in the face of the current market situation, in my opinion. I hope they achieve it. But it sure looks like someone's spreadsheet has some optimistic numbers in it over in Tokyo. 

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