Investor Relations

Top Management
 Message

Stock Price

Financial Info.

IR Library

Stock Infomation

Corporate Bonds and Rating

IR Calendar

Tech focus for investors

Analyst Coverage

FAQ

Contact
 Investor Relations

Disclosure Policy

Terms and
 Conditions of Use

IR News
 Delivery Service

HOME > Investor Relations > IR News

Third Quarter of FY2005 Financial Results Q&A Summary

[Questions Regarding the Information and Communications Business]

Q1:

What is the schedule for restructuring the Information and Communications business?

A1:

Legal procedures have delayed the spin-off until fiscal 2006, but we will carry out reforms of the business, organizational and cost structures by the end of March. During fiscal 2006, we plan to establish an operating structure that will allow this business to exceed the break-even point, even with its projected fiscal 2005 sales of 7.0 billion yen, and we aim to achieve an operating margin of 5 percent in fiscal 2008.

Q2:

What methods will you use to reduce personnel and how much will that cost?

A2:

The Information and Communications business employs about 300 people, and we need to trim that number by about one-third. The Anritsu Group has divisions that are busy, primarily the Test and Measurement business, and are accepting an equivalent number of temporary staff. Therefore, in principle, we want to reassign people to those divisions. However, we believe we will need an outplacement support program to deal with cases in which the wishes of those concerned cannot be met in our reassignment plan.

Q3:

Is there any risk of falling short of the fiscal 2005 forecast for this business?

A3:

Since sales to the public sector account for 80 percent of sales in this business, we believe we will achieve our forecast. However, there is a possibility that we will fall short of projected sales of PureFlow® and video distribution systems, which are products for the private sector, and we intend to conduct diligent risk management.

Q4:

What are your thoughts in the event that you are unable to carry out your reform measures?

A4:

We are currently putting all of our effort into successfully accomplishing the plan. However, we will manage business risks, include the risks mentioned above.

[Questions Regarding the Test and Measurement Business]

Q5:

How is integration with the former NetTest A/S (now Anritsu A/S) progressing?

A5:

The first integration measures were completed in November 2005. We have already made organizational changes and reduced the company's staff by about 12 percent. We are now working on integrating the company's sales organization and development road map as we move toward final completion of integration in March 2006. We are aiming for a structure that will allow the company to turn a profit in fiscal 2006.

Q6:

How long do you think the favorable conditions for handheld test and measurement devices will continue?

A6:

Base station construction is forecast to remain brisk in the near term worldwide, and demand will be strong for Anritsu's Site Master and Spectrum Master, which are highly competitive products. Also, in December we added an HSDPA option to the UMTS Master for WCDMA base stations, which we began selling in March last year, and orders are expanding for installation of base stations, primarily in the United States and Europe. For digital broadcasting field testers, we are also expanding new orders for new product lines with specific applications through measures such as meeting the DVB-T/H standard used in Europe. Given these conditions, we believe that sales of handheld products will maintain their strength at least through fiscal 2006.

Q7:

What are the growth prospects for the service assurance business aimed at the Next-Generation Network (NGN)?

A7:

In the course of building the NGN, which will bring about the development of VoIP through the integration of voice communications with IP, the acceleration of FMC, and the seamless integration of various services, interconnectivity will obviously be an issue due to different networks using the same lines. The service assurance business will center on services that monitor and analyze the service quality of networks and integrated networks. It is expected to grow as a means of solving connection problems. Currently, the market is expanding primarily in the United States and Europe, but we foresee outsourcing from the standpoint of cost control among Japanese telecommunications carriers, which have traditionally relied on self-manufacturing. We will work to develop and expand business in the domestic market by promoting collaboration with infrastructure suppliers.

Q8:

Orders in the handset manufacturing market in China are picking up. Where is the main customer segment?

A8:

It is primarily in orders for testers used in mobile phone manufacturing by design houses and electronics manufacturing services (EMS), which manufacture the brands of major Western mobile phone makers. They are used in the manufacture of low-priced GSM handsets for markets such as Africa and South America. We are also delivering directly to the R&D bases of Western manufacturers in China. In 2004 we established a Technical Support Center in China. Collaboration with our support center in Japan is smooth, and has begun to yield results.

Q9:

What is the outlook for 3G test and measurement equipment in Japan?

A9:

Compared to fiscal 2004, when we recorded large sales of testers for manufacturing 3G handset, there is a definite sense that the market for manufacturing equipment is becoming saturated in fiscal 2005. However, because these products are driven by development demand for HSDPA and preceding mobile communications standards, we think there will still be market opportunities. In addition, new companies will enter the market and the number portability system will begin in fiscal 2006. Competition among carriers to provide services for this system will increase, which is also expected to spur demand for measuring instruments for development of these new services.

Q10:

How are you addressing the red ink in European operations?

A10:

As a market, conditions in Europe are good, and sales are rising. Our aim is to create a framework for generating a profit through organizational restructuring in the European region and through synergy with the former NetTest A/S (now Anritsu A/S), which we acquired in August 2005. Specifically, in addition to reducing excess personnel, we will make improvements toward low-cost operations by consolidating the information infrastructure and logistics at our bases in Europe.

[Q&A on the Performance Forecast for Next Fiscal Year and Beyond]

Q11:

What are your prospects for achieving an operating margin of 10 percent or higher, a target of the medium-term management plan?

A11:

The market environment is moving in a positive direction. There are products in our core Test and Measurement business with an operating margin over 20 percent, and we plan to eliminate unprofitable divisions through business restructuring. We will do our best to achieve the 10 percent operating margin.