Vtech 2009 Annual Report Download - page 6

LETTER TO SHAREHOLDERS
4 VTech Holdings Ltd Annual Report 2009
The TEL business is expected to
perform well as industry consolidation
strengthens our market lead even
further. For the branded business, we
expect to see the full benefit of the
exit of a major competitor in North
America. For the ODM business, we
have recently signed a licensing
agreement with Telstra, a leading
telecommunications and information
services company in Australia, to
become its direct supplier of fixed
line handsets. The agreement will
further increase our presence in
the Australian market. In addition,
the sole supplier agreement with
Deutsche Telekom will start to make
a full-year sales contribution.
In addition to gains in market share,
the second half of the financial year
should also see contributions from
two new product categories. The
enterprise phone for small and
medium sized business in the United
States will allow VTech to enter the
commercial sector. Another potential
new growth area is Integrated Access
Devices, which we are developing
jointly with Funkwerk Enterprise
Communications GmbH.
The market for ELPs is likely to remain
challenging, and consumers are
expected to look for deals. In response,
we will step up our efforts to deliver
products that offer tremendous
value. Across our product ranges, we
will continue to support sales with
aggressive retail level promotions.
We expect margin pressure to be
partially offset by lower raw material
costs, especially of plastics, and by
our proven ability to engineer for
lower cost.
Product innovation will remain an
important factor in driving sales for
the ELP business. For standalone
products, following the successes of
the infant category in recent years,
we are introducing “Jungle Gym”.
Combining electronic learning, fun
and physical activities, Jungle Gym
products continue the push outside
the learning aisle, giving the ELP
business new avenues for growth.
Our platform products will be
augmented with a new reading
system, Bugsby, which offers pen-
touch technology and ease-of-use
at an affordable price. Children will
be able to read along with Bugsby
and interact with their favourite
characters in stories that build early
reading skills.
Although the global EMS market is
forecast to contract in the calendar
year 2009, we expect the Group’s CMS
business will continue to outperform
the global EMS market. Our position
in the professional audio segment
will continue to increase following
the establishment of a new state-of-
the-art audio laboratory at our R&D
centre in Shenzhen. Staffed by
specially trained engineers, the
facility enables our customers to
design, test and fine-tune products
on site, giving a great advantage
over the competition in time-to-
market for new products. We also
expect considerable momentum
from solid-state lighting, where the
market is growing and our existing
customers are expanding their
presence.
It has been a year of unprecedented
volatility in both the financial and
consumer markets. I would like to
thank my fellow directors, employees,
customers and suppliers for staying
the course as we navigate the
turbulence. As a company with
market leadership, excellent R&D,
efficient operations and a strong
balance sheet, we are very well
placed not merely to ride out the
storm, but to grow even stronger as
global economy eventually recovers.
Allan WONG Chi Yun
Chairman
Hong Kong, 15th June 2009
As a company with market
leadership, excellent R&D, efficient
operations and a strong balance
sheet, we are very well placed not
merely to ride out the storm, but
to grow even stronger as global
economy eventually recovers.
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