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Last Updated: Tuesday, 10 February, 2004, 08:05 GMT
Digital trouble hits Nikon shares
Nikon camera
Shares in Nikon, the Japanese camera maker, have slumped 10% after the firm warned falling revenues from digital cameras would hit its bottom line.

The company's announcement of a 7.4bn yen ($70m; 38m) loss for the three months to December follows similar ones from rivals such as Fuji and Olympus.

Digital cameras are rapidly taking over the photo market from film cameras.

But competition is squeezing prices, while parts shortages are beginning to cause trouble.

For Nikon, lenses are running short, leading to production delays and a consequent sales shortfall in the key holiday season.

Average prices, the firm said, were falling 20% a year.

Step change

Together with its fellow Japanese camera firms, Nikon also has to deal with the rise of the yen against the dollar, making products more expensive and therefore less competitive in the US.

The company warned investors of exchange rate trouble in November, as well as of poor sales of another key product: steppers, the multi-million dollar machines which are used in the process of etching circuits on microprocessor chips.

"The digital camera business was supposed to support earnings till the stepper business got back on track," said Noriko Oki, analyst at Morgan Stanley in Tokyo.

"But profitability in (cameras) was much weaker than expected, and until steppers rebound we are unlikely to see the company's overall profits improve."

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