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Thailand Flooding Impacting Digital Camera Market

11/07/2011 12:08:00 AM Eastern

New York - Digital camera makers
Canon, Nikon and Sony have all reported damage to either their facilities or to
component factories in Thailand, which will slow production.

Nikon said it was still trying to estimate the potential
damage caused by recent flooding to its Nikon (Thailand) Co. Ltd. manufacturing
operations, but added that there had been no casualties to any of the company's
employees.

Nikon said the situation is likely to cause shortages in
certain products, but gave no word on which products would be affected or if
any new products planned for release were impacted by the disaster.

The production operations, which are located in Rojana
Industrial Park in Ayutthaya Province in Central Thailand, sustained damage to
the first floor of all buildings where water levels approached 2 meters deep days
after the flooding began. Production had been shut down since Oct. 6.

No decision has been made on when it will resume. The
company said it will purchase new manufacturing equipment and looks to
reschedule production assignments as quickly as possible.

Canon reported that flooding in Thailand had forced it to
lower its earnings guidance for the upcoming quarter. Canon said the disaster
would likely cut annual sales by 50 billion yen ($657 million) and operating
profit by 20 billion yen for the financial year to the end of December 2011.
The company cut its annual operating profit forecast 5 percent to 360 billion
yen ($4.7 billion), citing a combination of the flooding, the strong value of
the yen against the dollar and euro and the continued weak economic outlook for
the United States and Europe.  The figure was partially offset by
cost-cutting and a faster-than-expected recovery from the March earthquake.

Sony said in its fiscal second-quarter
financial report that its earnings are being affected by the floods. (See story
on p. 6.) Specifically, the company will have to delay the introduction of its
Nex and Alpha cameras, knocking back annual profits by 25 million yen.

The impact on the digital camera
market is being seen by Best Buy. The retailer's holiday plans for digital
imaging was first hit by the tsunami in Japan, and now the record flooding in
Thailand is hobbling component factories and constraining supplies of finished goods.

"Digital imaging has really had a
very difficult year," Mike Vitelli, Best Buy Americas president and corporate
executive VP, acknowledged. "I'm not sure what the total impact of that will
be, but there were some shortages in the first half and it looks like there
will be some in the second half as well."

Doug Olenick contributed to this story.

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