Japan's Olympus to shrink compact camera business

TOKYO (Reuters) - Japan's Olympus Corp said on Wednesday that it planned to shift the focus of its digital camera business away from compact models and sell more high-end single lens reflex cameras to boost profitability.

The Tokyo-based company also said that it would halt production of portable digital music players, unable to keep up with stronger players such as Sony and Apple Computer in the fast-growing market.

Olympus is the world's fourth best-selling digital camera brand after Canon, Sony and Eastman Kodak, but is considered one of the weaker players in an industry suffering from slowing growth and steep price falls.

On Tuesday, Olympus said its group net profit tumbled to 2.17 billion yen (US$18.50 million) in the April-September first half from 6.71 billion yen a year earlier. The drop was due to a large loss in its imaging division, which handles cameras.

Olympus said that it aimed to have digital compact cameras account for 40 percent of sales in its imaging division five years from now, down from 72 percent last year.

It plans to boost digital single lens reflex (SLR) models so they account for 30 percent of the division's sales in five years, up from 3 percent last year. It also aims to focus more on lenses and other optical devices.

Demand for SLR cameras is growing faster than demand for compact models. SLR cameras also fetch higher profit margins than compact cameras, which are under intense pricing pressure with more than 30 makers now in the market.