Presentations & Events


- ended March, 2007

Taking the Initiative: Strategies for Continued Growth

- May 11, 2006

Q & A Session

Q1. You plan to invest 2.04 trillion yen in the next three years from 2006 to 2008. Please tell us about the amount of your investments in the SED and HDD businesses.
Regarding the SED business, SED Inc., a joint venture with Canon, plans to invest 180 billion yen in our Himeji factory. In the HDD business, we plan to increase production capacity to 1.7 times the current level by the end of FY2008.
Q2. You said that you will mass produce SED devices from FY2008. Please tell us when you will start to make capital investments in your Himeji factory and how much you are committed to achieving the plan.
SED is the kind of innovative display that comes along once every half century. Because of that, we will make every effort to achieve the plan. We will release the detailed schedule of the capital investment when the time comes.
Q3. What plan do you have for the automobile-related business in your mid-term plan?
We acknowledge that our automobile-related business slightly lags behind that of other companies. We will focus on the businesses related to HEV (hybrid electric vehicles) and fast recharging battery.
Q4. When do you think your audio-visual businesses will move into the black?
We aim to get the overall audio-visual business into the black in FY2007. Among those businesses, we aim for a turnaround in the TV business in the second half of FY2006. We are seeing improvements in our TV business in Europe and China, and our US TV business has now achieved eight consecutive years of surplus.
Q5. Your target operating income ratio for the Digital Products business is 2% in FY2008. How much will the TV and PC businesses contribute to achieving the target ratio?
Profit and loss in the PC business is influenced by depreciation of the yen. Normally, yen appreciation has a positive impact on our results. However, because it is impossible to forecast currency movement through to FY2008, we set a conservative target ratio. We also set conservative targets for the TV business, because we think it is too risky to expect to see the business post high earnings by FY2008. However, we aim to achieve higher ratios than the targets we have set for the PC and TV businesses.
Q6. Regarding the NAND Flash Memory, how will you deal with the increasingly intensive market competition that will result from Intel and Micron entering the market?
Our MLC (Multi Level Cell) ratio is already high, surpassing 95% of total output, which puts us ahead of other companies, and our rate of miniaturization is not far behind them. We continue to advance the development of products for future generations, so we believe we are competitive in cost.
Q7. What do you think of risks of excess supply and price erosion in the NAND Flash Memory business in the future?
We are aware of the risk, so we intend to make graduated capital investments in the business, carefully watching market conditions. Currently, production capacity is far from enough to meet demand.
Q8. What do you think of the competition between HDD 0.85 and NAND Flash Memory? Will 0.85 HDD be in a difficult position?
We believe 0.85 HDD will be able differentiated from NAND by decreases in cost and increases in capacity. We plan to increase capacity from the current level of 4 GB to 10 GB and even to 12GB in the future. We are determined to make capital investments in accordance with the market conditions.
Q9. Please tell us about your forecast for household appliances.
Our challenge in white goods is to achieve a more competitive cost structure for refrigerators. We believe we can reduce costs because of the new factory now being built in a joint venture with TCL group in China. The vacuum cleaner business has been in the black since the second half of FY2005. Our vacuum cleaner has the top share of the domestic market share in the category of cyclone vacuum cleaners.
Q10. Due to the large amount of investment, your FY2006 free cash flow forecast is minus 200 billion yen, which, I believe, may worsen, depending on NAND performance. Have you thought of other financing methods instead of borrowing, such as the spin-off of a blue chip subsidiary?
We believe our current financial standing allows us to generate the necessary funds. Because we intend to make our capital investments in the NAND business little by little, carefully watching the market conditions, we do not anticipate any serious risk for the business. We are able to cover any shortfall in funds by borrowing only, as we have significantly improved our financial standing. This cash flow plan is not made on the basis of an optimistic forecast; it is a conservative one with strict preconditions.
Q11. Can we consider your FY2006 mid-term plan as making the same kind of commitment as previous plans?
We have set higher goals, but we have lowered the figures announced in public because there is the potential for risk resulting from some unpredicted external environment change. In order to gain the trust of our customers, we need to achieving our stated targets.

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