Yamaha 2003 Annual Report Download - page 9

through the aforementioned distribu-
tion service.
In addition, in September 2002
we established MUSIC E-NET Inc.,
an Internet sales company that pro-
vides downloadable data and made-
to-order musical instruments.
In our AV/IT and semiconductor
businesses, we are striving to increase
growth and profitability.
AV/IT
In AV/IT, with the global market for
home theaters expanding, YAMAHA
is providing total solutions, including
visual products, and investing in
competitive products that draw on the
strengths of the Company’s technolo-
gies to enable further sales growth.
Furthermore, we are strengthening
our capacity to provide home music
network systems, which are expected
to become much more common in
the future.
In March 2003, responding to
falling prices overall, the prolifera-
tion of DVDs, and the fact that CDR-
RW drives are now standard built-in
features in most personal computers
and thus less profitable, YAMAHA
decided to close down its CDR-RW
drive business. The Company has
made no forecast regarding the
contribution such operations would
have made to earnings if this decision
had not been reached.
Semiconductors
In semiconductors, a sharp increase
in shipments of mobile phone sound
chips contributed substantially to
our business performance during
the year under review. This suggests
that YAMAHA’s strengths lie not
only in sound chips but also in the
provision of software (music data
formats designed for mobile phones)
and content (distribution business).
At present, most of these shipments
are going to Japan, South Korea,
and China; however, we expect the
market for mobile phone polyphony
sound chips to grow in the United
States and Europe. YAMAHA will
continue to focus on the development
of sound and network-related devices.
Under the medium-term manage-
ment plan, one of our major goals is
to improve the profitability of busi-
nesses in the Lifestyle-Related and
Leisure group and the Electronic
Parts and Materials group. To this
end, in addition to bolstering the
profitability of each viable business,
we are shutting down businesses with
poor prospects for recovery.
Lifestyle-Related and
Leisure Group
In the Lifestyle-Related and Leisure
group, YAMAHA is selectively
allocating resources to improve
profitability. In our recreation busi-
ness, we are aiming for profitability
by establishing a management sub-
sidiary for each YAMAHA resort
facility. In addition to clarifying
management responsibilities at
each resort facility, this structure
is designed to improve earnings by
enabling a thorough reassessment
of human resources—which, in turn,
will reduce fixed expenses related
to employee remuneration—and a
reexamination of each resort’s busi-
ness operations. Moreover, YAMAHA
has decided to close its struggling
Sunza Villa resort in June 2003 and
will terminate golf course operations
at the Kiroro ski resort at the end of
October 2003.
In lifestyle-related products, we
are aiming to improve profits by tying
up with other companies to cut manu-
facturing costs.
Electronic Parts and
Materials Group
In the Electronic Parts and Materials
group, in addition to aiming for
steady profits in the strong growth
potential magnesium mold business,
we are working to achieve stable
earnings in automobile interior com-
ponents and fittings by attracting new
customers and reducing manufactur-
ing costs. In line with this policy, we
have decided to halt the production
and sale of invar materials for shadow
masks used in cathode-ray tubes,
asegment of our electronic metals
business for which no profit recovery
is expected.
In these ways, YAMAHA is steadily
working to achieve the goals set
forth in the Company’s medium-term
management plan.
ANNUAL REPORT 2003 7