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President's Message
Management Policy
December 2011 We are pleased to report as follows the status of MegaChips Corporation based on results for the first half of the fiscal year ended March 31, 2012 (from April 1, 2011 to September 30, 2011).
We take this opportunity to express our sincere gratitude toward all our shareholders for their continued understanding and support.
Performance Overview
for the First Half of the Fiscal Year Ending March 31, 2012
During the first half of the fiscal year ending March 31, 2012, the Japanese economy continued to struggle in the face of the harsh conditions imposed by the Great East Japan Earthquake. In the electronic machinery and equipment industry where the Company belongs, demand for electronic components such as semiconductors and consumer electronic equipment declined, and the overall market contracted on a year-on-year basis.
In these circumstances, the market environment became more challenging, as demand for LSIs for storing game software (custom memories), our mainstay products, decreased, although demand for digital image monitoring systems for security and monitoring applications held firm.
| Actual results | Rate of change | |
|---|---|---|
| Net sales | 13,325 | - 16.6% |
| Operating income | 1,043 | - 30.6% |
| Net income | 762 | - 27.2% |
Progress in Customer-Oriented Business and General-Purpose Solution Business set up in the Medium-Term Management Plan
In the game, digital home appliance, and security areas, which are key areas of operation for the Company, how to keep providing customers with new value is an important challenge, and our strength has been that we have consistently offered our customers new value. Our business model, which we call "customer-oriented business," seeks to swiftly provide and propose technologies that match customers' products based on a deep understanding of the technical nature of the products and the information on market conditions and technology trends that we track in these product areas.
Looking at the present progress, we are developing new products in cooperation with several customers in the game and the digital home appliance areas and plan to commercialize them from the next fiscal year.
Meanwhile, we have been working on the "general-purpose solution business" to provide platforms with our distinctive technologies, so that our customers will be able to create high value-added new products and services. Particularly in the eco-energy area, we have reached the point of commercializing a power measurement system in the first half of the current year after working on the development for three years.
(For more details, HOME > Product Solutions > Eco-Energy Products)
This business model is different from one targeting specific customers. It seeks to propose highly competitive solutions that are built on our own technologies to a large number of customers in areas where a market is expected to emerge. The power measurement system that we recently commercialized is a device to manage electrical power and promote energy saving, and with this product as the beginning, we will boost the competitiveness of our solutions in the eco-energy area by broadening the applications to meet diverse customer needs and expand the range of solutions we provide, such as chips and devices (electronic components).
In addition, with a view to the smart grid market, we plan to help create an environment in which our customers can develop new products and services. We will provide them with sensors and equipment as network devices and chips for telecommunications infrastructure by organically aligning the functions.
Consolidated Results Forecast for the Fiscal Year Ending March 31, 2012
We have revised our full-year consolidated results forecast for the fiscal year ending March 31, 2012 on October 28, 2011, as we expect full-year results to fall short of our initial projection, given the large impact of lower demand for LSIs for storing game software (custom memories), our mainstay products, in the first half on our business performance.
| Full-year forecast | Initial projection | |
|---|---|---|
| Net sales | 33,500 | 39,500 |
| Operating income | 2,600 | 3,200 |
| Net income | 2,000 | 2,200 |
As noted, however, we have already planted the seeds for the customer-oriented business and the general-purpose solution business, and the growth should blossom into significant businesses over the medium term. The development of products for growth areas is proceeding largely according to plan. We will continue to develop basic technologies that will be the core for launching our distinct solutions ahead of our competitors and will work to create businesses for the future. At the same time, we will also focus on building a business structure that can generate earnings even in difficult economic conditions, through structural reforms that include a review of our business model, improvements in development efficiency, and cost cutting, while pursuing our growth strategies.
Dividends
MegaChips positions the distribution of profits to shareholders as an important management task. With respect to dividends to shareholders, we have adopted a policy of paying dividends once a year by determining the amount, based on the greater of a dividend payout ratio of approximately 30% or a dividend-on-equity (DOE) ratio of approximately 2% taking consolidated operating results, financial conditions, and investment plans into consideration.
(For more details, HOME > Investor Relations > Stock Information > Dividends)
We will continue striving to increase the value of our shares and improve capital efficiency by acquiring treasury stock in a flexible manner and on a timely basis, taking medium-term growth potential, the business environment, the market environment, and investment plans into comprehensive account, while adhering firmly to our dividend policy.
We hope that we can continue to count on the support and understanding of our shareholders.
