How is the Service Assurance business performing?

  Our second-half target for this business was to break even, excluding amortization of goodwill. Achieving this will be difficult, however, due to delays in concluding contracts with current customers and the burden of investment in new technology development to maintain our competitive edge. Nonetheless, operating loss has shrunk compared with the first half. In addition, orders from major European customers, an ongoing item, will be brought to contract during the current fiscal year, and therefore reflected in FY2007 results.

Can growth of sales outside Japan offset the end of the cycle in demand in Japan for measuring instruments for use in the development of third-generation mobile communications (3G) services?

  Over 80 percent of the market for measuring instruments is outside of Japan. Overall sales of measuring instruments for wireless communications are steadily increasing as a result of growth in demand outside Japan for measuring instruments for use in 3G and 3.5G development as well as measuring instruments for use in the installation and maintenance of base stations.

What are the trends in the market for measuring instruments for 3.5G and 3.9G development?

  With the introduction of 3.5G services outside Japan farther along than in Japan, we expect demand in other countries for measuring instruments for 3.5G development to remain firm in the near term. In Japan, although development of 3.5G mobile phones is somewhat behind schedule, we expect it to pick up during the fourth quarter, raising demand for measuring instruments. With respect to 3.9G, which is at the initial investment stage, we have adopted a medium-term approach.

What business opportunities do you see in the next-generation network (NGN)?

  NGN-related business is a pillar of our Mid-term Business Plan. We intend to discuss the scale of the market and other specifics in further detail at the financial results briefing presentation when we announce our progress under the Mid-term Business Plan.

When will demand for measuring instruments for high-speed optical communications take off in earnest?

  Anritsu began selling measuring instruments for high-speed communications at the end of 2006, and has already satisfied the initial round of demand. At present, we are continuing to develop functional enhancements for these products to respond to customer demand.
  We are increasing the pace of product development to meet the next wave of demand in the second half of FY2007, which we anticipate will be rather large.

What opportunities lie in measuring instruments for access networks and what is the scale of business?

  With the global progress of fiber-optic cable installation to enhance optical broadband services, demand in Japan and other countries is rising for the necessary measuring instruments. As the leader in this field, Anritsu expects orders in the United States to expand with the launch of new products co-developed with the optical measuring instruments group of the former NetTest A/S, which we acquired in August 2005.

What is the outlook for markets outside Japan in FY2007? In particular, are you concerned about slower growth in the U.S. market following the receipt of large-scale orders there in FY2006?

  The European market is firm, and we expect this situation to continue in FY2007.
  In the United States, even setting aside the large-scale orders during the second quarter of FY2006, Anritsu's business is growing steadily, unaffected by the weakening economy (which saw a year-on-year drop in GDP). Moreover, with the end of the temporary slump in capital investment caused by the merger of AT&T Inc. and BellSouth Corp., our overall outlook for the U.S. market in FY2007 remains good.