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Corporate & IR InformationTo our shareholdersA Letter to Shareholders and Investors
A Letter to Shareholders and Investors
A Message from Takeshi Kono, CEO
Renewed product mix and new growth on the Connectivity & Wireless business.
Thank you for your warm support, and we would like to extend our sincere apologies for our not having been able to meet your expectations as we posted net loss in Fiscal Year 2010. All our efforts to change the product mix over the last few years have started to deliver results, giving us another growth opportunity. We continue this effort to complete the product mix reform striving for better profitability in 2011.
Despite the tough business environment, we saw growth in the new strategic business areas posting higher sales on the year.
The electronics/IT industry, our playing field, is recovering from the global economic downturn with stronger export mainly to the emerging economies. The export business, however, was affected by yen’s rapid appreciation of late 2010, discouraging our customers to increase capital expenditure or R&D spending.
Amid the business environment like this, we continued our efforts to change the product mix, and achieved significant growth in a few new strategic areas. This helped us increase group sales on the year confirming our recovery. While we posted operating loss, it is nevertheless much better than last year thanks to cost reduction efforts such as labor, and streamlining assets.
We were not able to achieve the profit plan because increased engineering work orders pushed up the costs of wireless certification, engineering labor and outsourcing, the stronger yen adversely affected the export, and slow-moving inventories were written off earlier than the initial plan.
Wireless products drove the growth helping us reduce our dependency on print servers.
Sales by product shows our efforts to change the product mix are delivering intended results. The three strategic areas, which were newly set at the beginning of the year, grew to plan, and now we are overcoming the challenge of declining print server sales. Wireless LAN products, our most recent focus product, are faring well as our low-power, compact modules (SDIO) have won several design wins from US medical device manufactures as well as production orders from makers of printers, FA equipment, hand-held devices and so on in Japan. This allowed us to increase wireless LAN product sales 294% on the year, 18% of the total sales.
USB device servers, in the meantime, started showing growth potential especially in the next generation network environment as many broadband router makers adopt our USB Virtual Link (software), and NTT uses our device server for cloud-computing.
Many major business opportunities in FY2010. The key to growth is our proven ability to meet customers' expectations.
We are seeing strong growth in various other businesses: AV for the rapidly growing digital signage market, IC card authentication printing, and DMS (design and manufacturing services) coming with our design and manufacturing expertise. This tells that the market is recognizing our ability to perseveringly meet customer’s expectations through reliable and proven products and services. For further growth, we know perfectly well what we strive for: a flexible business structure to adopt changes in business, better process and speed, company-wide ability to meet customer’s expectations, and in-depth and timely propositions, and greater reliability and trust.
Continuous investment in new technologies and product development for stronger business recovery.
We continue to invest in new technologies and new product development to aggressively win new customers and markets. We aim for a leadership in the growing USB device server business by making USB Virtual Link Technology more competitive. We will further enhance our wireless technology expertise, WiFi in particular for the time being, to satisfying customers and markets’ demand for reliability, connectivity and usability.
We will meet your expectations by leading the above activities to strong earnings as soon as possible. Our policy on return to shareholders remain to be in line with our mid-to-long term business performance, and we regretfully have to miss dividend payment this year in order to further strengthen our financial position and business recovery. I would like to thank you for your continued support.
Takeshi Kono
CEO and President
Representative Executive Officer
