The last paragraph make a reference to Palm and mobile phones. Anyone care to editorialize????
.............................................................Kyocera Expands Production in Asia to Cut Costs (Correct)
Kyoto, Sept. 7 (Bloomberg) -- Kyocera Corp., which last week raised its earnings forecast to a record, will produce more of its parts in Asia starting next year to cut costs and boost profitability.
The world's largest maker of semiconductor packages is building four plants in Shanghai and is considering expanding its existing facility in Indonesia or setting up a new plant in Southeast Asia next year, Kyocera President Yasuo Nishiguchi told Bloomberg News in an interview.
Cutting costs is crucial for the Kyoto-based company as it aims to boost its pretax profit-to-sales ratio to 20 percent in coming years from about 15 percent for the year to March 31, 2001.
``One thing Kyocera must improve on is our labor-intensive parts plants are mostly based in Japan,'' said Nishiguchi. ``So our labor costs are very high. I'd like to accelerate improvement on this from next year.''
The four Shanghai plants will be located on a 60,000-square- meter site and could employ as many as 10,000 workers. The Southeast Asian plant won't be as big, and Kyocera doesn't plan to reduce workers in Japan because they will be engaged in production of higher value-added parts, Nishiguchi said.
Kyocera must also slash costs as parts prices fall. Executive Vice President Michihisa Yamamoto told analysts last week that the company expects parts prices to fall 5 percent to 10 percent in the year from April 2001.
During the analysts' meeting, Nishiguchi said the Shanghai plants will help Kyocera lower labor costs by 5 percent to 8 percent next year. ``The costs will go down further in coming years, which will help us to combat falling parts prices and to improve our profitability,'' he told the meeting.
Sales, Profits to Rise
Brisk demand for parts, such as capacitors used to regulate electricity in phone handsets, helped Kyocera boost its group net income forecast for the year through March 2001 to 106 billion yen ($1 billion), up 64 percent from a projection in May of 64.5 billion yen. It also revised its sales forecast to 1.27 trillion yen from 1.1 trillion yen.
Sales and profits will ``definitely grow more'' next year, said Nishiguchi, though he declined to provide specific figures. This year's 99-billion-yen investment in the Shanghai plants and other projects ``will contribute to our business performance from the second half of this year and next year,'' he said.
The company's strength also stems from the fact that about 80 percent of its sales come from parts and equipment needed in the expanding communications and information networks, Nishiguchi said. As the market built on Internet and optical fiber networks expands, ``Kyocera's business will naturally grow,'' he said.
Nishiguchi reiterated his forecast that worldwide mobile phone shipments by handset makers will keep growing, rising as high as 600 million units next year from over 400 million units this year.
Sales at Kyocera Wireless Corp., the mobile phone-making unit Kyocera bought in February from San Diego, California-based Qualcomm Inc., could reach 200 billion yen next fiscal year, Nishiguchi said. Kyocera has halved the number of workers at KWC to 2,000 and doesn't plan to cut more, he added.
Kyocera expects KWC to turn a profit from September, posting sales of 140 billion yen on shipments of 9 million units this year.
KWC will introduce a slimmer and lighter handset integrating a mobile phone and a handheld personal computer with Palm Inc. by the end of this year for about $500 in the U.S., said Nishiguchi, who wants to introduce the model to the Japanese market in the future. A previous version was developed by Qualcomm before Kyocera purchased the mobile phone-making unit.
Sep/06/2000 23:50 ET
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