What are the factors behind the recent increase in orders? Please specify the factors by region and by product category.

We have experienced well-balanced growth of orders compared with the same period last year throughout all the regions.
When analyzed by product category, we are currently observing a significant increase in demands for measuring instruments used for production of the third generation (3G) mobile terminals from our domestic (Japanese) and Chinese customers. We are reasonably confident that this product category will continue to generate a certain level of revenues due to the facts that the 3G mobile terminals are expected to be widely accepted in the global market going forward and that China, as a global manufacturing base, will not only expand its conventional EMS (Electronics Manufacturing Service) business but also provide significantly more OEM products for European manufacturers.
In addition, field testers used for optical fiber cable construction, which had been sold mainly in the Japan market, are also becoming well-accepted outside Japan market, particularly Americas, resulting in increased sales.

What is the current status of the Service Assurance business, in terms of the volume of orders received and the degree of improvement in its profitability?

The current level of orders received is showing that we can safely achieve the sales plan for this fiscal year, or a year-on-year increase of 20 %. The amount of loss has already decreased to half the level of the previous fiscal year, and we can reasonably expect to achieve breakeven during the second half of this fiscal year as long as the business develops as planned.

Given that General-Purpose Test and Measurement business has a significant growth potential, can we expect the profit margin comparable with that of testing and measuring equipment for the development of 3G mobile terminals?

As we are fully aware that the market is highly competitive, we should be very careful to avoid being locked into price competition and stay profitable by providing not only hardware but highly value-adding application software as well. For example, a digital signal generator, which had initially been developed for mobile phone base stations, has now successfully expanded its application to the field of digital TV broadcasting through the development of relevant software.

In order to achieve the targeted operating profit of 12.5 billion Yen for FY2008, as is stated in the Mid-Term Business Plan, the Company needs roughly 5 billion Yen more profit than in the FY2007 forecast. Given the cost structure in which one percentage point improvement of cost of goods sold ratio will boost the Company's profit by about 1 billion Yen; how do you plan to earn the additional profit to fill the gap?

In order to hit the profit target mentioned above, it is critically important for us to strive for the growth of the Test and Measurement business through expanding the sales in the NGN-related field as well as the market of general-purpose testing and measuring equipment with increased applicability. We also should achieve recovery in sales of the Service Assurance business, which has been posting losses.

According to the full year forecast by region, you have presented an estimate for Americas, which is no greater than the previous fiscal year. Is the Company not in a position to benefit from the environment where U.S. telecommunications carriers are increasing their capital investment?

During the previous fiscal year, we received from a U.S. carrier a large contract for hand-held measuring instruments for construction and maintenance of mobile phone base stations. Although we do not anticipate a contract of the same size during this fiscal year, the business has been strong enough to achieve the sales as good as the previous year.

What is the expected level of research and development (R&D) spending for the next fiscal year?

As we should continue to take a cautious approach towards R&D spending with its cost-effectiveness in mind, we do not expect significant reductions in R&D spending for the next fiscal year.
We will continue to maintain R&D partnerships with global leaders in next generation telecommunications including Long-Term Evolution (LTE) succeeding the 3G technologies. By taking advantage of the integration of cutting-edge technologies gained through the R&D partnerships, we will further refine our strategy to manufacture and distribute highly value-added products to diversified customers.