A redoubtable brand at 50% off recent prices. Managed poorly, yes, but in the midst of a management shakeup. Where did the money go? Even if it went to the George W Bush library fund, it's not a knockout punch.
Get rid of upper management and the board, sell off the endoscope business to JNJ or half a dozen others who would love to have it and shut down the camera division if it can't make money.
This looks like a great opportunity to me.
What am I missing?
Unfortunately, it looks like this is far worse than we had contemplated here. It is not merely the corrupt siphoning off of profits as it had appeared, but rather the payments seem to be part of a larger accounting fraud meant to hide undisclosed losses. Olympus is now the proverbial black box, and you can't be certain how profitable this company is -- or even whether it is profitable at all. It is scary to imagine though what lurks in the accounting practices of other Japanese companies. This is the sort of thing that people assume can only happen to reverse merger companies in China -- not to Japanese bluechips.
I just saw the ex-CEO on Bloomberg, and he reiterated his view that the company can be saved and that there is value there. I have to imagine that if the shareholders force the current Board out, and stuck him back in, there will be some pop.
It seems that CFO-san used good money to wipe out losses in off balance sheet transactions. It sounds like Enron but it's not. Enron used Enron stock to keep off balance sheet entities from blowing up. When Enron stock blew up, everything blew up.
Olympus makes the gold standard endoscopes so there is value in the business. But there may be other off balance sheet garbage that may appear. Time will tell. I see $20 ps next year.
Yes. while the details are not out yet, $4.4bn in market cap wiped off the company vs. a $400-$600m fraud. this company is not going to unwind like Enron or Lehman or MF Global! I think it's worth $25 on the ADR worst-case. Could take 3/6/9 months to rerate. But in the meantime Fujifilm, Canon, and maybe Hoya will be looking at this business very carefully. I'd assign a 60-70% chance of M&A in the next 12-18 months given nepotistic nature of Japanese business.
I agree, but for different reasons. I think that the camera unit is probably worthless -- a passion project of the Chairman which has no prospect of returning to profitability and is a massive cash drain, and perhaps a larger one than they have admitted. I doubt it has any positive value to anybody, and the best possibility for shareholders is that it will be given away for Y1.00, or just shut down. This won't happen though with the current Board.
The medical unit though is worth real money to an acquirer. The endoscope business is in any case a money-spinner. The looting of the company doesn't seem to impact upon the business itself, and one might suspect that with the looting stopped, the benefit should accrue to shareholders.
Of course, just because these guys have now been caught red handed, doesn't mean that they can be removed -- this is Japan. Also, if they are willing to steal from shareholders, who knows what else is lurking under the surface. There is something of a "black box" element to this name that is a real risk.
Still, I think its worth a shot. But, I can't figure out a good way for a retail investor in the United States to buy this though. The ADR is very thinly traded, and doesn't track the main listing too well. How are people buying this?