Presentations & Events


- ended March, 2004

Presentation on FY2003 Business Outlook and Renovation of the Personal Computer Business

- September 16, 2003

Q & A Session

Q1. Please break down the JPY 30b revision of your projected operating income.
This is not the right time to discuss details, other than to say that we lowered our forecast for PCs and peripherals by JPY 30b. Performance in AV and home appliances is now below expectations. Social Infrastructure and Electronic Devices are doing well, but not enough to offset lower performances elsewhere. Also, we have taken into consideration a JPY 10b advance allowance for social security, which we did not originally budget.
Q2. How have your PC and peripheral businesses looked recently? Do you plan to announce favorable operating income for peripherals separately from results for PCs?
We manage them separately, and continue to consider separate disclosure. It is true that the operating income of peripherals is much bigger.
Q3. Newspapers reported your PC restructuring in August. What is the difference between then and your announcement today?
Those articles did not mention our basic philosophy of competing on the basis of cutting-edge technologies. But at the same time, we have to improve our cost structure. Past successes slowed our response to a fast-moving business environment. In July-September, we believe we can retain our market share for the past quarter.
Q4. How are recent prices for LCDs and DRAM?
They remain high. But as you are aware, Toshiba also supplies HDDs, and their prices remain favorable for us. We will use common components across PC boards as much as possible, and expect to have more bargaining power and to get better prices.
Q5. As president, what is your evaluation of this PC renovation plan?
We succeeded in product differentiation in the past by launching a wide variety of products. But this success could not prevent price erosion and subsequent worsening profitability. I believe these actions will allow us to regain the profitability of FY2002, but have to admit that we are a year behind the schedule of the mid-term business plan. I will seriously follow up the progress of this plan, and hope to raise my satisfaction from 80% now to 100% by next March.
Q6. Did you consider spinning off the PC business as you did with LCDs?
It is an option, and one we actually once considered. But this is not the type of problems we can resolve with a spin off; this is a structural problem.
Q7. Will you change the targeted numbers of digital products in your mid-term plan?
The PC business failed to reach the first-year target of the mid-term plan. We have to consider how to get it back on the growth track from FY2004 onwards.
Q8. Did you change your projected PC sales of 4.5m units this year? What is the current situation in PC prices?
We raised our projection to 4.7m units, on strong demand. Price erosion almost stopped at the start of August. We are half-cautious, half-optimistic about market prices for the rest of the year. We are sure we can achieve our July-September sales target.
Q9. You still say that cutting-edge technologies are essential to your PC business. Is this completely the same as what you used to say in the past?
We have to utilize our cutting-edge technologies and high quality and launch products for which customers are willing to pay a premium. It is essential to offer various products while minimizing the number of development platforms. From now on we can react more flexibly to a changing business environment with a smaller number of platforms. This is the big difference between the past and the future.
Q10. Was the worsening PC profitability reported to top management without delay?
Yes, and we took actions in May. But they were just holding actions, and we could not immediately take more aggressive actions, such as quickly reducing the number of platforms under development or ramping up production in China.
Q11. Please explain more about measures to trim costs?
The second half of FY2003 will see cost reductions totaling JPY 26b compared to the first half, including JPY 12b from improving development efficiency and JPY 11b from streamlining sales.
Q12. Is the additional JPY 10b operating income in semiconductors from strong NAND flash sales?
NAND flash will contribute most, but sales of discrete devices and system LSIs are also healthy.
Q13. If you reduce the number of platforms by 30%, how can you compare yourself with Dell and HP?
In Japan, we offer many singular products such as B5-sized portable PCs. Without them, we can reduce the number of platforms to about the same level as our US competitors.
Q14. Do you think these actions will bring your Japanese PC business to profit?
We will try to get the PC and peripheral businesses in the black. But I regret that it would be very difficult to profit in the domestic market only with our PC business.

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