The Sony/Olympus Connection

(news & commentary)

Since I’ve covered this story from its beginnings in the fraud that crippled Olympus a few years back, I suppose it only fair that I continue to cover it.

In case you forgot, Olympus was found to be hiding huge investment losses from the 1990’s in various illegal ways, and this was exposed when they hired Michael Woodford to be CEO and he couldn’t reconcile over US$1.5b in accounting. Woodford was fired as members of the Olympus board desperately tried to hide what had really happened. When all was said and done and correct and better audited financials finally were posted, Olympus turned out to be very undercapitalized.

Which is where Sony stepped in and bought 10% of Olympus for a huge infusion of cash.

Today Sony announced that they were selling half that stake to JPMorgan Chase. It appears that Sony made a significant profit in the slightly over two years it held the stock (they might have also received dividend payments), as they bought the entire stake for US$642m and sold half for US$632m at current market prices.

This is all you need to know about the sale: it speaks more to Sony’s needs than Olympus’s. Sony gets a fair chunk of cash back that it can use to shore up its remaining businesses. Olympus still has the same number of stockholders, but Sony is no longer the largest holder of their stock.

In slightly related news, Olympus officials apparently are priming the Japanese business press for some bad numbers from the Imaging division: whisper numbers at quarter’s end have the yearly loss in the groupincreasing.

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