Epson 2007 Annual Report Download - page 49

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47
Annual Report 2007
However, because technological innovation and product cycles are extremely fast changing in markets
that Epson is focusing its managerial resources on, if the Company is unable to respond flexibly to such
changes and develop and introduce competitive products, or if product sales do not grow as much as
anticipated, Epson’s results could consequently be adversely affected.
(6) Epson relies on certain clients in its electronic devices business
Epson has poured management resources into such efforts as developing technologies and securing pro-
duction capacity for the display business, which accounts for more than half of the sales in the electronic
devices business and positions the market for mobile communications devices as its main business
domain. As a result of this, Epson has a record of transactions with the market’s major manufacturers of
mobile communications devices and has worked to maintain good relationships among these customers,
such as by engaging in the medium-term joint development of products. A relatively high proportion of
sales is to these major manufacturers.
However, there is a possibility that these major customers will not carry out business with Epson on a
scale comparable with the past. If Epson was to lose its business with these clients, Epson’s results of
operations could consequently be adversely affected.
(7) Trends in the electronic devices market might adversely affect Epson
There are various trends in the electronics devices market, such as in semiconductors and in mobile com-
munication devices, that reflect product life cycles and the economic environment. History also shows that
large declines in the industry are cyclical and, when they occur, demand becomes sluggish, there is
excess production and prices fall.
Adeterioration in the situation in, for example, the electronics devices market, such as for semicon-
ductors and for devices for mobile communication devices, could adversely affect Epson’s financial condi-
tion and results of operations. There is also no assurance that Epson can always accurately predict future
trends, and it is possible that Epson might not be able to make investments that are timely or appropriate
enough to respond to market trends.
(8) Epson competes with other companies in all its businesses
Epson faces serious competition in all its businesses with the following types of companies, and this com-
petition could adversely affect Epson’s results.
1. Powerful companies with large amounts of funds or strong financial compositions.
2. Companies in such countries and regions as Taiwan, Korea, or China that have the ability to manufac-
ture competitive products or compete on the price level in Epson’s markets.
In addition to the above competition, there is also the possibility that powerful companies Epson is not
currently in competition with may use their brand power, technological strength, ability to procure funds,
excellent marketing resources, sales skills or ability to produce at low costs to enter a business area of
Epson’s and compete with it.