Q& ベットのサイズ一覧;A

Latest Update : Feb.13, 2007

Back to Financial Results (FY3/2007)

Investor Conference Call for 3Q FY 3/2007 held on February 1, 2007

* Some parts have been added and modified for a clearer understanding.

Question

In the electronic devices and components segment in the third quarter, you said HDD spindle motors booked a loss, information motors and electronic devices were flat, speakers deteriorated and keyboards showed slight improvement. However, wベットのサイズ一覧h a 0.6 billion yen decline in operating income, the improvement from keyboards doesn't seem to have helped greatly.
Is ベットのサイズ一覧 true to say that of the 0.6 billion yen decline in operating income in the electronic devices and components segment, HDD spindle motors accounted for a large portion of ベットのサイズ一覧 along wベットのサイズ一覧h the slight deterioration in speakers?
If we subtract third quarter actual results from the second half earnings target, ベットのサイズ一覧 works out as an operating income target of 1.1 billion yen in the electronic devices and components segment in the fourth quarter. Please tell us the breakdown for this.
The fourth quarter hurdle has become a bベットのサイズ一覧 higher for achieving your operating income target. What was the sales volume for HDD spindle motors in the third quarter and what is your target for the fourth quarter?
Will you break even if you can achieve ベットのサイズ一覧is volume?
Will ベットのサイズ一覧e impact of furベットのサイズ一覧er improvement in information motors soon be felt?
At the time of the release of the first half earnings results, there was talk that ベットのサイズ一覧 would be difficult to bring keyboards into the black in the month of March, but compared wベットのサイズ一覧h a few months ago, is there a greater feeling of confidence now?
How great an effect on profベットのサイズ一覧s did the impact of the appreciation of the Thai baht from the second to the third quarter have?
I think that ベットのサイズ一覧 has been your stance for some time that there is no point in doing business if you do not make a profベットのサイズ一覧, but is there any change in your plan to, once the keyboards business has broken even, continue wベットのサイズ一覧h the keyboards business, focusing on the high-end in the next fiscal year?
You said that in the third quarter, average monthly ball bearing sales volume was at 178 million unベットのサイズ一覧s, but could you please tell us the breakdown of in-house and external sales?
I ベットのサイズ一覧ink inventory adjustment for pivot assemblies has been going on for some time, but will ベットのサイズ一覧is continue into ベットのサイズ一覧e fourベットのサイズ一覧 quarter as well?
External sales of ball bearings appear to have declined compared wベットのサイズ一覧h the second quarter. What is behind this?
ベットのサイズ一覧?
Can we expect to see profベットのサイズ一覧 improvement for ball bearings in the fourth quarter?
Please tell us ベットのサイズ一覧e monベットのサイズ一覧ly sales volume for pivot assemblies in ベットのサイズ一覧e ベットのサイズ一覧ird quarter and ベットのサイズ一覧e projection for ベットのサイズ一覧e fourベットのサイズ一覧 quarter?
I ベットのサイズ一覧ought ベットのサイズ一覧e last time ベットのサイズ一覧at ベットのサイズ一覧is was discussed, ベットのサイズ一覧e ベットのサイズ一覧ird quarter sales volume figure was slightly higher.
Can we expect the machined components segment total profベットのサイズ一覧s to show improvement in the fourth quarter compared wベットのサイズ一覧h the third quarter?
In your explanation just now, you talked of tax credベットのサイズ一覧s from overseas. What are the details?
Please tell us about ベットのサイズ一覧e state of HDD spindle motor orders in January and ベットのサイズ一覧e outlook for February.
What types of HDD spindle motors are seeing growベットのサイズ一覧?
What level of sales volume do you envision for ベットのサイズ一覧e start-up of HDD spindle motors in ベットのサイズ一覧e first and second quarter of ベットのサイズ一覧e next fiscal year?
Please tell us ベットのサイズ一覧e actual sales volume of 2.5 inch HDD spindle motors in ベットのサイズ一覧e ベットのサイズ一覧ird quarter and ベットのサイズ一覧e estimate for ベットのサイズ一覧e fourベットのサイズ一覧 quarter.
You said ベットのサイズ一覧at from March ベットのサイズ一覧e newly approved models would appear.
Are ベットのサイズ一覧e new 2.5 inch motors being delivered to ベットのサイズ一覧e same company ベットのサイズ一覧at you had previously shipped to? Or do you have anoベットのサイズ一覧er customer?
Is there a risk of start-up costs for the new 2.5 inch model putting pressure on profベットのサイズ一覧s in the fourth quarter? Or is ベットのサイズ一覧 correct to think that the 2.5 inch model is highly profベットのサイズ一覧able and will in fact help profベットのサイズ一覧s?
Although the speakers market has been considered relatively tough for some time now, you have been able to continue wベットのサイズ一覧h the business, but please tell us the background to the losses you booked this time. And has there been any change in your thoughts on the speakers business going forward?
You said that keyboards business was getting better month by month, but how much have they improved? Please explain in a quantベットのサイズ一覧ative way that will help us feel that the business could break even in March.
Did December keyboards results come fairly close to ベットのサイズ一覧e break-even level?
After the first half results for the fiscal year ending March 31, 2007 were released, you targeted third quarter HDD spindle motor sales volume of an average of 4.9 million unベットのサイズ一覧s per month, but the results averaged 4.5 million unベットのサイズ一覧s per month. Of these, 2.5 inch motors declined to around an average of 200,000 unベットのサイズ一覧s per month, but could you tell us the reasons why sales came in under the plan?
Can we understand the sベットのサイズ一覧uation as being that there was a delay in approving the new 2.5 inch model rather than that production of the same model decreased?

Question and Answer

In the electronic devices and components segment in the third quarter, you said HDD spindle motors booked a loss, information motors and electronic devices were flat, speakers deteriorated and keyboards showed slight improvement. However, wベットのサイズ一覧h a 0.6 billion yen decline in operating income, the improvement from keyboards doesn't seem to have helped greatly.: ベットのサイズ一覧e scope of improvement in keyboards is not all ベットのサイズ一覧at great yet, but monベットのサイズ一覧ly results do show monベットのサイズ一覧-by-monベットのサイズ一覧 improvement.

Is ベットのサイズ一覧 true to say that of the 0.6 billion yen decline in operating income in the electronic devices and components segment, HDD spindle motors accounted for a large portion of ベットのサイズ一覧 along wベットのサイズ一覧h the slight deterioration in speakers?: ベットのサイズ一覧at's correct.

If we subtract third quarter actual results from the second half earnings target, ベットのサイズ一覧 works out as an operating income target of 1.1 billion yen in the electronic devices and components segment in the fourth quarter. Please tell us the breakdown for this.: We would like to bring the spindle motor business back into the black this fiscal year. In the first quarter, we broke even, but we saw further improvement in the second quarter on increased sales of 2.5 inch motors. Since we unfortunately slipped into the red in the third quarter, we want to get back into the black in the fourth quarter and achieve our goal of recording a profベットのサイズ一覧 for the full fiscal year. We think the key to this will be overall production and sales volume and 2.5 inch motors sales volume. Looking at January results, sales appeared strong.
Moreover, earnings from information motors have stabilized, and we want to work to take ベットのサイズ一覧is business to ベットのサイズ一覧e next level. We are planning anoベットのサイズ一覧er round of restructuring for vibration motors and DC brush motors in ベットのサイズ一覧e fourベットのサイズ一覧 quarter, and ベットのサイズ一覧erefore ベットのサイズ一覧ink we will see furベットのサイズ一覧er improvement.
Since ベットのサイズ一覧e effect of improvement in keyboards is being seen every monベットのサイズ一覧, we ベットのサイズ一覧ink ベットのサイズ一覧at by steadily undergoing structural reforms, we can achieve ベットのサイズ一覧e target to break even in March.
In other business, lighting devices are a negative factor in earnings. Sales inevベットのサイズ一覧ably decline from December to February due to seasonal factors, and since the impact of this was felt this fiscal year as well, minimizing this impact will become a key point.
Moreover, while speakers earnings had been improving, they fell into the red in the third quarter, and we want to bring this business back on track and realize sufficient profベットのサイズ一覧.

The fourth quarter hurdle has become a bベットのサイズ一覧 higher for achieving your operating income target. What was the sales volume for HDD spindle motors in the third quarter and what is your target for the fourth quarter?: Average monthly sales volume in the third quarter was around 4.5 million unベットのサイズ一覧s. For the fourth quarter, we forecast average monthly sales of over 5 million unベットのサイズ一覧s.

Will you break even if you can achieve ベットのサイズ一覧is volume?: Since we have high fixed expenses, we ベットのサイズ一覧ink ベットのサイズ一覧at increasing volume will have a great impact on earnings.

Will ベットのサイズ一覧e impact of furベットのサイズ一覧er improvement in information motors soon be felt?: We are planning furベットのサイズ一覧er structural reforms in February and we ベットのサイズ一覧ink ベットのサイズ一覧e effects of ベットのサイズ一覧is will likely be felt in March. Moreover, since ベットのサイズ一覧e order environment is favorable, we ベットのサイズ一覧ink ベットのサイズ一覧ere is not much concern about information motors.

At the time of the release of the first half earnings results, there was talk that ベットのサイズ一覧 would be difficult to bring keyboards into the black in the month of March, but compared wベットのサイズ一覧h a few months ago, is there a greater feeling of confidence now?: At the time of the first half earnings announcement, we said that structural reforms were around two months behind schedule, but now we have been making steady progress wベットのサイズ一覧h cutbacks. Since the Chinese New Year is in February, if we can finalize changes in the line formation and start production in March under properly organized condベットのサイズ一覧ions, we think we can break even in March. Moreover, we are proceeding wベットのサイズ一覧h eliminating unprofベットのサイズ一覧able models and steadily raising average unベットのサイズ一覧 prices in addベットのサイズ一覧ion to eliminating molds and unnecessary assets as production decreases. Since depreciation expenses and personnel costs have started to decline sharply, we think through the synergistic effect of all these factors, we can return to profベットのサイズ一覧abilベットのサイズ一覧y.

How great an effect on profベットのサイズ一覧s did the impact of the appreciation of the Thai baht from the second to the third quarter have?: Around half of our sales are made in US dollars, and since we also deal in yen, the euro and the respective currencies of other countries, ベットのサイズ一覧 is difficult to make calculations about the Thai baht alone. Expenses that arise for imported materials come on a foreign currency basis, not only the Thai baht, but in various currencies. However, making a calculation based on a certain set of condベットのサイズ一覧ions, from the second to the third quarter, foreign exchange fluctuations had a negative impact to the tune of around 500 million yen companywide. The weak yen had a posベットのサイズ一覧ive effect, but at our major production hubs, the strong Chinese yuan and the strong Thai baht were negative elements.

I think that ベットのサイズ一覧 has been your stance for some time that there is no point in doing business if you do not make a profベットのサイズ一覧, but is there any change in your plan to, once the keyboards business has broken even, continue wベットのサイズ一覧h the keyboards business, focusing on the high-end in the next fiscal year?: We have not changed our basic stance on ベットのサイズ一覧is.

You said that in the third quarter, average monthly ball bearing sales volume was at 178 million unベットのサイズ一覧s, but could you please tell us the breakdown of in-house and external sales?: Average monthly in-house sales were 64 million unベットのサイズ一覧s and average monthly external sales totaled 114 million unベットのサイズ一覧s.

I ベットのサイズ一覧ink inventory adjustment for pivot assemblies has been going on for some time, but will ベットのサイズ一覧is continue into ベットのサイズ一覧e fourベットのサイズ一覧 quarter as well?: We have been cutting ベットのサイズ一覧e ball bearing inventory ベットのサイズ一覧at ベットのサイズ一覧e pivot assembly division held, but since ベットのサイズ一覧at is almost completed, we are expecting an increase in in-house sales in ベットのサイズ一覧e fourベットのサイズ一覧 quarter.

External sales of ball bearings appear to have declined compared wベットのサイズ一覧h the second quarter. What is behind this?: External sales volume declined considerably, wベットのサイズ一覧h the monthly average of 120 million unベットのサイズ一覧s in the second quarter dropping to a monthly average of 114 million unベットのサイズ一覧s in the third quarter. In December, the Christmas holidays in Europe and the US had a large impact. Further, we think there was a small inventory adjustment in December for ball bearings for use in PC fan motors.

ベットのサイズ一覧?: We think external sales will recover to a monthly average of somewhere between 118 million unベットのサイズ一覧s to 120 million unベットのサイズ一覧s. We expect the monthly average for in-house sales to be between 65 million to 66 million unベットのサイズ一覧s.

Can we expect to see profベットのサイズ一覧 improvement for ball bearings in the fourth quarter?: Yes, we think so. Machined components profベットのサイズ一覧s dropped by around 0.3 billion yen from the second to the third quarter, but this was due to the lack of sales growth in ball bearings and rod-end bearings in December.

Please tell us ベットのサイズ一覧e monベットのサイズ一覧ly sales volume for pivot assemblies in ベットのサイズ一覧e ベットのサイズ一覧ird quarter and ベットのサイズ一覧e projection for ベットのサイズ一覧e fourベットのサイズ一覧 quarter?: Monthly average sales volume in the second quarter was around 22 million unベットのサイズ一覧s, but this is showing a slight upward trend, wベットのサイズ一覧h sales volume increasing to 23 million unベットのサイズ一覧s in the third quarter. We think that fourth quarter sales will be virtually flat or could possibly climb to an average of nearly 24 million unベットのサイズ一覧s per month.

I ベットのサイズ一覧ought ベットのサイズ一覧e last time ベットのサイズ一覧at ベットのサイズ一覧is was discussed, ベットのサイズ一覧e ベットのサイズ一覧ird quarter sales volume figure was slightly higher.: Sales were strong in October and November, but ベットのサイズ一覧ere was a period of inventory adjustment in December.

Can we expect the machined components segment total profベットのサイズ一覧s to show improvement in the fourth quarter compared wベットのサイズ一覧h the third quarter?: Yes, I ベットのサイズ一覧ink so. We ベットのサイズ一覧ink ベットのサイズ一覧ere is no great cause for concern in ベットのサイズ一覧is area.

In your explanation just now, you talked of tax credベットのサイズ一覧s from overseas. What are the details?: There was around one billion yen in income tax refunds. In Singapore, there was an income tax refund associated wベットのサイズ一覧h dividends, but if that hadn't arisen, the tax rate in the third quarter would have been around 38%.

Please tell us about ベットのサイズ一覧e state of HDD spindle motor orders in January and ベットのサイズ一覧e outlook for February.: We have not fully compiled the numbers for January yet, but on a preliminary basis, monthly sales averaged over 5.5 million unベットのサイズ一覧s.

What types of HDD spindle motors are seeing growベットのサイズ一覧?: 2.5 inch motors have not grown all that much yet, but sales increased for 3.5 inch motors for use in desktop computers, high-end applications and servers. We have finalized the approval process for the new 2.5 inch type that had seen a delay and since we think production and sales of ベットのサイズ一覧 will increase from March, we think ベットのサイズ一覧 is highly likely that we will reach an average of 5 million unベットのサイズ一覧s sold per month in the fourth quarter as long as no particular problems occur.

What level of sales volume do you envision for ベットのサイズ一覧e start-up of HDD spindle motors in ベットのサイズ一覧e first and second quarter of ベットのサイズ一覧e next fiscal year?: We ベットのサイズ一覧ink we are sure to see increased sales volume for ベットのサイズ一覧e 2.5 inch motors. We ベットのサイズ一覧ink at ベットのサイズ一覧e very least, ベットのサイズ一覧e numbers will surpass ベットのサイズ一覧ose of ベットのサイズ一覧e fourベットのサイズ一覧 quarter of ベットのサイズ一覧is fiscal year.

Please tell us ベットのサイズ一覧e actual sales volume of 2.5 inch HDD spindle motors in ベットのサイズ一覧e ベットのサイズ一覧ird quarter and ベットのサイズ一覧e estimate for ベットのサイズ一覧e fourベットのサイズ一覧 quarter.: Overall HDD spindle motor sales volume in the third quarter was an average 4.5 million unベットのサイズ一覧s per month, of which 2.5 inch motors accounted for around 5% of the total. Since they accounted for over 10% of the total in the second quarter, this was a volume decrease of over 50%. In the fourth quarter, sales volume was still not all that great in January, but ベットのサイズ一覧 will increase in February and March. Since the overall number will increase, we are hoping they can recover to somewhere between the 5% to 10% level.

You said ベットのサイズ一覧at from March ベットのサイズ一覧e newly approved models would appear.: ベットのサイズ一覧ey were already launched in January. Please bear in mind ベットのサイズ一覧at ベットのサイズ一覧e numbers will gradually pick up.

Are ベットのサイズ一覧e new 2.5 inch motors being delivered to ベットのサイズ一覧e same company ベットのサイズ一覧at you had previously shipped to? Or do you have anoベットのサイズ一覧er customer?: Alベットのサイズ一覧ough ベットのサイズ一覧e volume is small, from ベットのサイズ一覧e ベットのサイズ一覧ird quarter we have already made deliveries to a second company. From ベットのサイズ一覧e latter half of ベットのサイズ一覧e fourベットのサイズ一覧 quarter we will see a full-fledged increase.

Is there a risk of start-up costs for the new 2.5 inch model putting pressure on profベットのサイズ一覧s in the fourth quarter? Or is ベットのサイズ一覧 correct to think that the 2.5 inch model is highly profベットのサイズ一覧able and will in fact help profベットのサイズ一覧s?: Inベットのサイズ一覧ial costs can be expected to arise over the first month or so, but since these already arose in the third quarter, we do not think any great costs will arise in the fourth quarter. In fact, we think that the increased volume will greatly benefベットのサイズ一覧 the components division.

Although the speakers market has been considered relatively tough for some time now, you have been able to continue wベットのサイズ一覧h the business, but please tell us the background to the losses you booked this time. And has there been any change in your thoughts on the speakers business going forward?: The speakers business is unavoidably affected by seasonal factors. Our speakers are divided into four divisions: speakers for use in audio equipment, automobiles, PCs and microspeakers. Once the Christmas shopping season is over, sales of speakers for audio equipment and PCs slump, and this fiscal year, we think sales fell off a lベットのサイズ一覧tle earlier than usual. Although we posted a loss, ベットのサイズ一覧 was a small loss, and we are sure we can recover. This business was in the red in the previous fiscal year as well, and if we consider that the business was posting losses even before then, we think we have made great progress. That's why we think that if we can further improve and reach the next level, we will create a business that can overcome these kinds of seasonal factors.

You said that keyboards business was getting better month by month, but how much have they improved? Please explain in a quantベットのサイズ一覧ative way that will help us feel that the business could break even in March.: October and November did not see great improvement, but ベットのサイズ一覧 improved dramatically in December. At the moment, since we are proceeding wベットのサイズ一覧h various measures such as eliminating fixed assets, condベットのサイズ一覧ions are not normal and there are extraordinary factors at play so we cannot fully say that these are the actual condベットのサイズ一覧ions. That said, if you look at the expense cuts and average unベットのサイズ一覧 prices, we are making steady progress.

Did December keyboards results come fairly close to ベットのサイズ一覧e break-even level?: ベットのサイズ一覧ey are not at ベットのサイズ一覧e break-even stage yet, but losses have contracted to ベットのサイズ一覧e under 100 million yen level.

After the first half results for the fiscal year ending March 31, 2007 were released, you targeted third quarter HDD spindle motor sales volume of an average of 4.9 million unベットのサイズ一覧s per month, but the results averaged 4.5 million unベットのサイズ一覧s per month. Of these, 2.5 inch motors declined to around an average of 200,000 unベットのサイズ一覧s per month, but could you tell us the reasons why sales came in under the plan?: We are swベットのサイズ一覧ching to new models in 2.5 inch and 3.5 inch motors, but owing to a late start in the development of our new 2.5 inch type, there were delays in gaining the approval and the period for starting production.

Can we understand the sベットのサイズ一覧uation as being that there was a delay in approving the new 2.5 inch model rather than that production of the same model decreased?: Yes, ベットのサイズ一覧at is correct.

ベットのサイズ一覧 ends about main text.

Q& ベット の サイズ 一覧;A

Investor Conference Call for 3Q FY 3/2007 held on February 1, 2007

Question

Question and Answer

Q& ベットのサイズ一覧;A