Epson 2006 Annual Report Download - page 10

Seiko Epson Annual Report 2006
8
to remain profitable even with no commensurate growth in
sales. This will provide us with the flexibility to look at various
options for the business going forward.
Another key issue for attaining medium- to long-term
growth going forward is the creation of products in the next
crop of growth business domains. Epson has an array of original
and distinctive technologies at its command. I believe that
consistently rolling out highly competitive products backed
by these technologies, all in step with changes in the market,
technological and competitive environments, will allow us to
generate reliable earnings. Our plans also call for reinforcing
the R&D, technology development, and product development
capabilities critical to creating the new businesses and products
that will spearhead Epson’s future growth.
Where capital expenditures are concerned, we plan to hold
investments within the scope of depreciation and amortization,
in line with our redefined portfolio and with an emphasis on
profitability, with the goal of recouping our investment within
three years. Furthermore, we intend to constantly refine
Epson’s business and product portfolio by objectively analyzing
businesses and products, and our technology system, from a
short-, medium- and long-term perspective.
Q3. Can you give more details about how
you plan to reorganize Epson’s electronic
device businesses?
We strengthened the foundations of our operations through
sweeping reforms to the fixed-cost structure enacted during
the past fiscal year. In semiconductors, which have a heavy
fixed cost burden, we booked a lump-sum write-off of costs
for consolidating and integrating production sites, reorganizing
production lines, and for writing-off technology acquisition
costs. In small- and medium-sized LCD operations, we re-
corded an asset impairment charge for MD-TFDs, where prof-
itability is likely to face tough challenges ahead, and also
recorded a loss on the impairment and disposal of certain
fixed assets in amorphous polysilicon TFTs and low-tempera-
ture polysilicon TFTs. In HTPS TFT-LCD panels for 3LCD
projectors, we decided to close out some production lines at
the Suwa Minami Plant by March 31, 2007, channeling
production over to the highly efficient Chitose Plant. The raft
of measures I’ve mentioned led to the booking of special losses
during the year under review, but further accelerated fixed-
cost structure reform in all of our electronic device businesses.
In addition to these measures, we have sought to increase
work efficiency and promote staff rotation, while at the same
time reducing the number of contingent workers in Japan and
downsizing information-equipment-related operations in
Europe. We anticipate seeing a total of ¥64.0 billion in ben-
efits emerge from fixed-cost structure reforms over the three-
year period to March 31, 2009.
Create products for
future growth areas
Drastically slim
semiconductor operations
LCD
IC HTPS PRJ
QD
IJP
LP
Watch
Optical BS
Low
Low
High
High
Operating margin
Market
growth rate
Enhance earnings
potential by driving
the “No. 1” strategy
Strengthen the high
earnings structure
and develop
new business segments
Evolve new business
models in IJP, LP
and PRJ to
strengthen earnings
Strengthen small- and
medium-sized LCD
and HTPS businesses
and implement
a winning strategy
▲ ▲
Inkjet printers
Laser printers
Business systems
3LCD projectors
Small- and medium-sized LCDs
High-temperature polysilicon TFT-
LCD panels for 3LCD projectors
Semiconductors
Quartz devices
Business/Product Portfolios and Strategies
Redefine the mission and focus of businesses and products
by managing our portfolio to secure sustained earnings