Yamaha 2006 Annual Report Download - page 22

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22
The AV/IT segment comprises audio and visual equipment (including amplifiers
and receivers, speaker systems, and Digital Sound ProjectorTM products),
commercial network karaoke equipment, routers, and IP conferencing systems.
Yamaha is a leader in markets driven by music, sound and networks where it
exploits its technical expertise in music, sound, and networks to develop and
supply high-quality products that meet customer expectations.
OUT OF SIGHT AND SOUND
Review of Operations AV/IT
Digital Sound ProjectorTM YSP-1000
Fiscal 2006 performance
Shipments of the Company’s newly launched
YSP series of Digital Sound ProjectorTM were
favorable. Overall sales of home theater sys-
tems, though, declined amid a depressed mar-
ket among certain other factors. By geographic
area, sales rose in the U.S. market because
Yamaha broadened its distribution through such
sales channels as mass merchandisers, but
sales dropped in Japan and Europe. Sales of
home theater systems in China, meanwhile,
were poorer than expected, the result of delays
in the development of a local sales network. The
segment’s sales of virtual private network (VPN)
routers to small and medium-sized enterprises
likewise suffered, amid fierce price competition.
Segment sales thus fell 2.3% year on year,
to ¥75.9 billion, while operating income declined
from ¥3.7 billion to ¥2.1 billion. Although ongo-
ing efforts to cut production costs were suc-
cessful, a reduction in gross profit margins
caused by fierce competition served to com-
pound the effect of lower sales.