Q&A on First Quarter Results for the Fiscal Year Ending March 2010
Operating income was almost as projected. As we are seeing upturn in orders, we revised up sales and operating income forecast for the first half.
Increases in the overall net sales for NAND flash memory, DRAM, and foundries are cited as factors for upward revision of net sales for the first half of the year. At the moment, it is still difficult to expect that we will go into the black during the January-March 2010 period, but depending on how the market environment develops, such a possibility cannot be entirely ruled out.
During the July-September period, we expect SPE and FPD orders for combined to grow 10-20% compared to the April-June period. Orders for SPE are expected to remain almost on the same level as in the preceding quarter. It is also expected that the composition of orders by application will show the same tendency as in the April-June period. We reckon that, if any, investments for NAND flash memory and DRAM will drive further orders during the October-December period. Meanwhile, we anticipate that orders for FPD will recover quickly during the July-September period. Orders for the October-December period are expected to remain almost on the same level as during the July-September period.
There is no problem because we have abundant cash reserves. We partly adopt a method of receiving advances from customers. We are continuing to work to shorten lead-time and are striving to reduce working capital.
The trend for orders is becoming favorable, but manufacturers of NAND flash memory and DRAM are investing only in design shrinkage, so orders from them remain at a low level. Foundries have entered a phase of investments for high-volume production and orders from them are strong.
The fixed-cost reduction plan is progressing as scheduled. Fixed costs were reduced by nearly 10 billion yen during the April-June period. The primary objective of this restructuring is not to reduce fixed costs for the immediate future but to bring stronger products to the market by enhancing the efficiency and strength of development and manufacturing.
We worked on the restructuring of overseas bases at an early stage. However, we are always considering what the appropriate level of personnel is. The basic policy is to match our personnel system with customers' investment plans, but the United States is our important development center, so we must take that into consideration. We will continue to consider what the appropriate scale of the overall workforce is, while keeping an eye on future market scale.
Our aim is to make a profit during the next fiscal year. Depending on the level of net sales, it may be necessary to take further measures to secure a profit. But our policy is to aim for medium- and long-term growth and avoid easy personnel reductions. We are in the process of prioritizing operational bases that need to be restructured; and we will continue to consider what measures should be taken in the future.
We expect the SPE market to grow by at least 30%, and possibly by 50% next year. We would like to develop our etch systems and cleaning systems so that they enjoy the largest share of their respective markets in around five years.
We are not considering withdrawing from the prober business. But we will review that business to determine where its value lies and establish a new business model for probers. As for M&A, we will not pursue economies of scale through M&A activities. We will actively consider M&A if synergistic effects are expected.