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Pentax wants to make cameras with Samsung

Written by: Staff

TOKYO, Apr 5: Japan's Pentax Corp. is in talks with a unit of South Korea's Samsung Electronics about jointly producing digital single lens reflex (SLR) cameras to expand on their development deal, Pentax's chief executive said in an interview on Wednesday.

Fumio Urano also told Reuters that losses in its camera division were smaller than expected in the financial year ended March 31, and said the firm had put aside about 10 billion yen (.20 million) for acquisitions over the next year to drive growth.

Pentax grabbed headlines in October with an announcement that it and Samsung Techwin Co. Ltd. would jointly develop digital SLR cameras -- high-end models that use interchangeable lenses -- but the agreement did not extend to production.

Urano said Pentax was now in discussions about jointly producing SLR bodies with Samsung, which is still interested in possibly making them on its own. Under any deal, Pentax would continue to handle production of its lenses, he said.

''Going forward we will be talking about various things including how best to handle production,'' said Urano, who started his career in Pentax in 1968 as a camera designer. ''The body is basically the same so it would be best to make it together in one place. That would be the most efficient thing to do.'' Their first collaboration came earlier this year in the form of a Samsung-brand camera that incorporates some Samsung technology but is almost entirely designed and made by Pentax. A jointly developed camera will not come until this autumn.

Urano said Pentax's basic strategy was to focus more of its resources on high-margin digital SLR models and steer clear of fierce price competition in the compact segment, but that strong sales of compact cameras recently had come as a welcome surprise.

He said planned job cuts and other restructuring measures were progressing smoothly and its imaging division, which mainly handles cameras, would show a loss smaller than the 1.9 billion yen previously forecast for 2005/06.

At the very least, the division will achieve an operating profit of 500 million yen in 2006/07, he said. Digital camera shipments should increase about 8 percent to 3.0 million units, with digital SLR units seen doubling from 120,000 last year.

''We are not looking just to increase the number of models and go aggressively after unit sales, the most important thing is to pursue profit. But we are not going to complain if sales keep increasing as they have,'' Urano said.

POCKET MONEY Pentax gets nearly half of its sales from its imaging division, but the bulk of its profits come from its life care business, which handles endoscopes, and optical components such as DVD pickup lenses and camera units for mobile phones.

While cleaning up the losses in the camera business is a top priority for Pentax, the world's 12th-biggest digital camera maker, analysts have pointed to endoscopes and other medical devices as the main growth engine over the medium term.

Urano has earmarked 10 billion yen for acquisitions over the next year and is primarily eyeing targets in the life care field. He said U.S. surgical device maker Microline Inc., which it purchased for million in late 2004, was a good guide for the type of company he wanted to buy.

''That was really a successful shopping experience,'' Urano said. ''We are looking for more companies like Microline. It's a good size -- not too big that you have to take on the bad parts as well. You just buy a company that has only things you want.'' Urano also unveiled plans to add 50 additional staff to its endoscope division at its headquarters in Japan, to help achieve its goal of boosting its share of the global endoscope market to above 20 percent from around 15 percent now.

Urano acknowledged that Pentax had recently lost share in the U.S. due to the introduction of cheaper endoscopes by one of its rivals, which include Olympus Corp., the dominant player with 70 percent of the market, and Fuji Photo Film To bolster its optical components business, Urano said Pentax was currently working with a handful of television makers to develop optical units for rear projection TVs. He also said output of pickup lenses should rise this year.

But he said Pentax would find it difficult to hit its operating profit target for 2006/07 of 10 billion yen, which was unveiled as part of a medium-term business plan released last year. Its estimate for 2005/06 is a profit of 5.2 billion yen.

Missing the bullish 2006/07 target would not surprise investors, which pushed Pentax's stock to a three-month closing high of 730 yen on Wednesday. The market consensus for operating profit in 2006/07 is 8.5 billion yen, according to four analysts questioned by Reuters Estimates.


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