Monday, July 04, 2011

Ricoh Has to Cut 9% of Workforce in 10,000 Jobs, Why Still Acquiring Pentax?

(Shiro Kondo, President and CEO of the Ricoh Group - BBC Picture)

First, see what BBC reported:-

"We have become a big company and need to re-engineer our corporate structure throughout to become more muscular," said Shiro Kondo, president and chief executive.

"We have done very little pruning of unprofitable businesses, and we need to pull out of some."

So, is that Pentax camera/imaging business actually profitable? If it really is, why Hoya has tried every effort to prune it over years?!

Next, let's see another report from the Business Week, with quoted source from Bloomberg:-

"May 26 (Bloomberg) -- Ricoh Co., the Japanese office- equipment maker, plans to cut 9 percent of its workforce over the next three years to revive profit growth amid falling sales."

"The company plans to take measures including cutting 10,000 workers and consolidating factories by the year ending March 2014, it said in a statement today. Tokyo-based Ricoh said it expects the steps will cost 60 billion yen ($733 million) by next fiscal year and boost its operating profit by 140 billion yen in three years."

So, on top of that, the Pentax acquisition will cost Ricoh an additional US$124M more, which is just 17% of the original "sudden" cost.

“We need to make the painful reforms” to recover earnings, President Shiro Kondo said at a press conference in Tokyo. “The quake had a big impact on us, as most of our major plants in Japan are concentrated in the northeast.”

Frankly, they will have yet another painful reform for how to deal with the new Pentax and how to cut cost/jobs within Pentax also, I'm afraid!

After all, why Ricoh still acquires Pentax just looks like a big mystery to me! At least the share price of Ricoh has stopped rising and then dropped slightly after the announcement of the Pentax acquisition news. It seems that the investors are on the sidelines in the meantime before they are to invest further. In contrast, the share price of Hoya has surged and grew up for several percent after the same announcement. So, the share market responses do have hinted us something, haven't it?

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