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Business

Casio's camera unit faces first operating loss in five years

Consumer electronics maker bitten, again, by boom-bust cycle

Casio's TR series cameras became a big hit in China.

TOKYO -- Casio Computer has long been a trendsetter in the consumer electronics world, creating such hits as the Casio Mini in 1972, the world's first personal calculator, the Casiotone series of early keyboards in the 1980s, and its flagship shock-resistant G-Shock watches.  

Casio's TR series digital cameras -- touted in China as the perfect gadget for taking selfies -- has an attached stand that lets people take photos of themselves easily. Casio has had strong camera sales in China, where selfies have been all the rage. It has done much better than fellow Japanese camera makers Canon and Nikon, which have struggled in the country.

But Casio, which has built a reputation for creating new markets by fusing unique ideas with advanced technology, faces a new test. Its digital camera business likely suffered its first operating loss in five years in the year through March.

The trouble may be a blip. First-year sales of the TR series were so limp that the company talked about pulling the plug on the line. That all changed, however, after a popular blogger in Hong Kong wrote that the camera's shape-shifting abilities made it perfect for taking selfies.

Word soon spread across China and before long the product was flying off the shelves. For Casio, whose digital camera business had previously weighed on earnings, the boom sparked in Hong Kong was a godsend. Casio's digital camera business had operating losses for four straight years through March 2012. Once the TR series caught on, company's earnings recovered rapidly. The digital camera business logged an operating profit of about 4 billion yen ($36.7 million) for the year through March 2016, around 10% of the company total.

Gone in a flash

Since last year, however, Chinese camera makers have started selling cheaper digital cameras, stealing some of Casio's business. The company has tried to turn its fortunes around with the release of new TR models in February, but earnings have dropped as the popularity of the camera has sagged. 

Casio's bread-and-butter earnings rely on watches like the G-Shock. Digital cameras are an offshoot and unlikely to become a pillar of the company's growth strategy. They have only a marginal impact on the company's overall earnings.

Nonetheless, management at Casio is pinning hopes on the future of its camera business. President Kazuhiro Kashio hinted at entering the car-mounted camera market, indicating a possible departure from the traditional compact camera market.

Kashio's comments reflect his concern that his company may have to scale down its operations to stay in business. The 2008 global financial crisis prompted the company to sell off its liquid crystal display panel and cellphone businesses. The watch business now generates about 90% of the company's profits, up from around 20% from a decade ago.

A slump in the digital camera business indicates the risk of over-reliance on trendy products. For example, Casio posted its first net loss since listing in the year ended March 1999 after the G-Shock boom had run its course. Since then, however, the company has made a number of comebacks with a flurry of new products that created buzz in the market. 

But it is back to the basics for Casio: Innovation is key to rejuvenating its camera line. 

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