Is a Blackstone Exit Best for Leica ?

[CameraQuest]

If Blackstone is not happy with Leica, most likely Leica is not all that happy with Blackstone either.

So Leica gets a new CEO - most likely given the instructions of increasing profits. Good luck with that. The M and S product lines can not realistically take price increases. The T product line is sales dead. If the lead time on a new better selling product line is two years, will Blackstone be willing to wait that long for results?

Whatever the new CEO does, I don't see Leica profits greatly increasing in this climate of decreasing digital camera sales.

So the new CEO will probably make adjustments amid wonderful promises of bigger profits - and fail to deliver. Granted profits could be increased somewhat just by overcoming management mistakes - but it still likely to make the HUGE difference Blackstone most likely is looking for.

What happens then? Blackstone will exert yet more pressure to get higher profits and return on investment. Those will be happy times for all in Leica management.

The best solution for Leica may be getting Blackstone out of the Leica picture, replaced by with a new partnership with another experienced camera maker that has realistic expectations of what can really be accomplished in today's camera marketplace.

Unfortunately replacing Blackstone may not be an easy or pretty task.

Stephen

 

[f16sunshine]

Product lines....

If Leica was to begin actually producing lenses for other mounts, it sure seems they could find some great footing there.
As an outsider looking in, their problems all seem to come from the camera side.
Licensing to Panasonic is fine but, actually producing high end lenses for other mounts in that big new factory could really be good.

Panasonic is probably a much better fit than BS. They create products to produce their revenue. It just makes sense.
Leica needs help with their tech. Partnering with a tech giant with avested interest provides that help.

 

[View Range]

Stephen, what camera maker would you like to see be the partner?

 

[johannielscom]

Voigtlander should get in with Leica.

Mr. Kaufman and Mr. Kobayashi together would be a brilliant tag team 😉

 

[daveleo]

Product lines....

If Leica was to begin actually producing lenses for other mounts, it sure seems they could find some great footing there.
As an outsider looking in, their problems all seem to come from the camera side.
Licensing to Panasonic is fine but, actually producing high end lenses for other mounts in that big new factory could really be good.

Panasonic is probably a much better fit than BS. They create products to produce their revenue. It just makes sense.
Leica needs help with their tech. Partnering with a tech giant with avested interest provides that help.

Thank you, Andy for typing what I was too timid to type.
I am not a Leica follower, but it seems to me for a long time now, L should do what they do best - lenses for other camera mounts.

 

[CameraQuest]

Stephen, what camera maker would you like to see be the partner?

ANY camera manufacturer would likely be a better long term Leica fit than Blackstone.

That said, Panasonic is probably the most logical given their long and successful relationship with Leica.
Whether or not that deal could be made, who knows.

Leica does not always does not always take the most logical or profitable route. Over a decade ago I talked with top Leica management about producing R lenses in Nikon F mount. It would have kept the R lens lineup in production and became a major profit source. You all know how many Leica lenses in Nikon F mount were sold.

Stephen

 

[hipsterdufus]

It could make sense having Panasonic be the partner for Leica. Even if Leicas sell at minimal/negative profit, Panasonic could view it as a loss-leader flagship brand to get people to buy their cheaper cameras. Many supercars (I'm looking at you, Ford GT) are sold at a loss to bring prowess to the brand. I could see something similar working in the camera market.

 

[fireblade]

Blackstone poured $300 million into Leica...how much are they willing to lose to walk away?

 

[Solinar]

Blackstone poured $300 million into Leica...how much are they willing to lose to walk away?

I didn't know that. A considerable sum even if it's tiny percentage of Blackstone's total investments.

I'd rather see an entity already in the camera business replace Blackstone. Is Panasonic ready to make the leap into a FF 35mm digital?

 

[View Range]

Stephen, the problem is most (all?) camera manufactures are also in trouble. Sony overall is in very bad shape. Nikon's sales are plummeting. How long will it be until all point and shot cameras are replaced by cell phones? I'm not sure there is a camera manufacturer with earnings big enough to be a helpful partner. Is Panasonic willing to sacrifice earnings to help Leica?

 

[CameraQuest]

Blackstone poured $300 million into Leica...how much are they willing to lose to walk away?

Blackstone already has some losses on the deal if Leica return on investment does not meet initial projections.

The new question becomes whether Blackstone can make more money with a big Leica hair cut sale and investing Blackstone $ elsewhere,
or holding onto Leica.

Its hard to imagine that someone at Blackstone is not hard at work to answer that question.

Stephen

 

[Jack Sparrow]

Blackstone poured $300 million into Leica...how much are they willing to lose to walk away?

That's some exchange rate... 😉

But it was only 140M euros (155M dollars). Potentially more if there was additional funding after the initial deal.

 

[Roger Hicks]

Blackstone already has some losses on the deal if Leica return on investment does not meet initial projections.

The new question becomes whether Blackstone can make more money with a big Leica hair cut sale and investing Blackstone $ elsewhere,
or holding onto Leica.

Its hard to imagine that someone at Blackstone is not hard at work to answer that question.

Stephen

Dear Stephen,

Hard, verging on impossible. I have to admit that I was mightily puzzled when Blackstone bought in. Maybe someone there was unable to understand that Dr. Kaufmann doesn't always think quite the way they do. As you so rightly say, "ANY camera manufacturer would likely be a better long term Leica fit than Blackstone."

Cheers,

R.

 

[fireblade]

The business model is flawed, they had to sell 3,500 MM to recoup their money on that R&D/build...they sold 3 times that amount, but then open the new Portugal factory at a cost of 65 million Euro, but here is the cherry...Kaufmann funds the build, Leica then pay him rent....and Blackstone allow this?
The one year Leica turn a profit, Blackstone want in..bad decision as we now see.
Further, 90% of Leica sales are in the USA and China....too many eggs in the one basket.
....anyways, there is always another sucker waiting in line with a wad of money to spend....a Japanese camera firm?..maybe, but their negotiations will be hard, shrewd and to suit them...time.

 

[fireblade]

That's some exchange rate... 😉

But it was only 140M euros (155M dollars). Potentially more if there was additional funding after the initial deal.

....."Blackstone didn’t acquire a 44% share for about $300 million in Leica because they’re nice. They want to make money. Now they’re pushing a marketing guy? Doesn’t marketing sell air bubbles? What about experience and knowing the industry? Cameras and Leica are Kaufmann’s and Schopf’s Herzblut. COO Markus Limberger as new CEO would certainly make more sense than an industry outsider."

🙂

 

[Jack Sparrow]

....."Blackstone didn’t acquire a 44% share for about $300 million in Leica because they’re nice. They want to make money. Now they’re pushing a marketing guy? Doesn’t marketing sell air bubbles? What about experience and knowing the industry? Cameras and Leica are Kaufmann’s and Schopf’s Herzblut. COO Markus Limberger as new CEO would certainly make more sense than an industry outsider."

🙂

Your source (The.me) appears to be wrong.

 

[Colin Corneau]

...Further, 90% of Leica sales are in the USA and China....too many eggs in the one basket.....

Only the #1 and #2 economies in the world.

 

[Daniel Teoli Jr.]

If Blackstone is not happy with Leica, most likely Leica is not all that happy with Blackstone either.

So Leica gets a new CEO - most likely given the instructions of increasing profits. Good luck with that. The M and S product lines can not realistically take price increases. The T product line is sales dead. If the lead time on a new better selling product line is two years, will Blackstone be willing to wait that long for results?

Whatever the new CEO does, I don't see Leica profits greatly increasing in this climate of decreasing digital camera sales.

So the new CEO will probably make adjustments amid wonderful promises of bigger profits - and fail to deliver. Granted profits could be increased somewhat just by overcoming management mistakes - but it still likely to make the HUGE difference Blackstone most likely is looking for.

What happens then? Blackstone will exert yet more pressure to get higher profits and return on investment. Those will be happy times for all in Leica management.

The best solution for Leica may be getting Blackstone out of the Leica picture, replaced by with a new partnership with another experienced camera maker that has realistic expectations of what can really be accomplished in today's camera marketplace.

Unfortunately replacing Blackstone may not be an easy or pretty task.

Stephen

Good summation.

My advice to Leica is to try to get back to basics. Come out with a plastic rangefinder with a high grade sensor. ($2500) Keep up with the M, high grade sensor. Maybe the high $ collectors cams if they are profitable. The only new cam I'd come up with is a manual rangefinder M43. That is it. Leica is known for their rangefinders...stick with what you know Leica.

If their optics division is profitable then keep it.

 

[Daniel Teoli Jr.]

....."Blackstone didn’t acquire a 44% share for about $300 million in Leica because they’re nice. They want to make money. Now they’re pushing a marketing guy? Doesn’t marketing sell air bubbles? What about experience and knowing the industry? Cameras and Leica are Kaufmann’s and Schopf’s Herzblut. COO Markus Limberger as new CEO would certainly make more sense than an industry outsider."

🙂

I concur. They need experience.

 

[Daniel Teoli Jr.]

The business model is flawed, they had to sell 3,500 MM to recoup their money on that R&D/build...they sold 3 times that amount, but then open the new Portugal factory at a cost of 65 million Euro, but here is the cherry...Kaufmann funds the build, Leica then pay him rent....and Blackstone allow this?
The one year Leica turn a profit, Blackstone want in..bad decision as we now see.
Further, 90% of Leica sales are in the USA and China....too many eggs in the one basket.
....anyways, there is always another sucker waiting in line with a wad of money to spend....a Japanese camera firm?..maybe, but their negotiations will be hard, shrewd and to suit them...will the Germanic blood in Kaufmannn lower its pride and arrogance....time.

Sure, build the Leica in Japan and sell em for $2500 for brass and $1450 for plastic.