Consolidated Results for the Second Quarter Ended September 30, 2010

Q&A summary

Click on the appropriate question to view the answer.

Overall

Information-related equipment

Electronic devices


Overall

  • Q1Does the fact that you have upwardly raised your profit forecasts mean that you have more profit and loss visibility in the second half?
  • AWe raised our first half outlook at the time of the first quarter results announcement, but left our forecast for the year unchanged - which was effectively a downward revision for the second half. Now we are raising our second- half outlook. Compared to our initial outlook we see promising progress although we see this weighed down by the impact of foreign exchange.
  • Q2Why did you reduce your initial plan for R&D expenses from 76 billion yen to 62 billion yen? What R&D expense levels do you expect next year?
  • AWe noticed slow execution of R&D expenditure in our analysis of the first quarter. Approximately half of the 14 billion was recorded as manufacturing and other expenses, and the other half was a straight reduction due to lower fixed costs and depreciation charges.
    We have carefully analyzed last year's research programs, and selected those that we believe to be the most promising. There is no change to our stance of aggressively promoting those programs and providing necessary investment. Next year we expect to increase R&D expenditure.
  • Q3How much operating income do you expect next year, the final year of your medium-range business plan?
  • AWe would definitely like to generate higher income levels than this year.
  • Q4Which businesses will contribute most to the bottom line next fiscal year?
  • AIn information-related equipment, we expect business systems, commercial and industrial inkjets printers, and projectors to contribute most. Electronic devices will contribute to the overall total by no longer making a loss.

Information-related equipment

  • Q5What are the prospects for the inkjet printer market? Why didn't you achieve your plans for unit volume in the first half?
  • AThere is almost no change in our view that the overall market will grow by 3% this year. The reason that we didn't achieve plan in the first half is that we did not follow our competitors in cutting prices to sell off inventory before the year-end selling season.
  • Q6How do you see sales trends for inkjet printers in the second half?
  • AWe have developed a full lineup of enterprise-oriented models for markets such as the US and Europe, and expect to surpass last year's totals.
    Although the selling season has just begun we believe we are doing well so far
  • Q7What is the latest situation in the inkjet printer market in Japan?
  • AOur market share was temporarily affected by inventory issues caused by better than expected sales of printers in Japan.
  • Q8Please describe your efforts in business systems (SIDM and POS-related products) in the next fiscal year.
  • AWe forecast continued robust sales of SIDM and POS-related products in Asia due to demand associated with tax collection. We especially believe demand will be strong in China and Vietnam. The market environment for POS is also growing better in Europe and North America and we will work closely with systems integrators to build on the base we have there. In North America, we are also noticing demand growing for products such as coupon printers using inkjet technology, and are also seeing signs that this market will take off in Europe and Japan. We believe we can expand net sales due to expanding demand for new types of products like these.
  • Q9Why will projector shipments increase in the second half? What are the prospects for the next fiscal year?
  • AAlthough there were certain fears that demand for projectors in the US education market would suffer a slowdown, the market rebounded. There are also growing needs in the education market in emerging economies, and there is excellent demand for interactive models. We believe this situation will continue—or even grow—in the next fiscal year.

Electronic devices

  • Q10What will be the main business in the electronic devices segment next fiscal year and beyond?
  • AQuartz and semiconductors will be our core businesses going forward. We will determine the direction of the Suzhou factory, which is responsible for small- and medium-sized displays back-end processes, in the course of the current fiscal year.
    HTPS TFT LCDs are the core device in projectors and we will continue to strengthen that business.
  • Q11What will be the approximate impact on profit and loss in the current and subsequent fiscal years of closing down the production line that Epson is currently operating at the Tottori Plant?
  • AWe have processed some orders from Sony at our Tottori Plant in the current fiscal year, and have incurred some costs due to ongoing business structure reforms.
    These costs will no longer be a factor next year after we close the line down.
  • Q12Will your loss-making small- and medium-sized display business stop losing money in the next fiscal year and beyond?
  • AOur market share was temporarily affected by inventory issues caused by better than expected sales of printers in Japan.
  • Q13When will you make a decision about the back-end processes at the Suzhou Plant? Do you expect a change in extraordinary losses related to this?
  • AThe Suzhou Plan does not have a significant impact on profitability. However, we would like to make a decision on the plant as soon as possible. Whatever that direction will be does not change the fact that we do not expect a major increase in extraordinary losses.