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Kyocera pins hopes on Iridium, DDI

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Kyocera is re-engineering itself to take advantage of the explosion in the telecoms market. The company is pinning many of its future hopes on its subsidiary DDI, which has cellular network technology it can export, and on its involvement with the Iridium satellite mobile network, financed largely by Motorola. Last week, Kyocera reported a 33 per cent drop in its profits for its interim six months period to 30 September but the company insists it can become a global telecomms player. Hideki Ishida, chief financial officer of the Kyocera Corporation, said: “The Asian economy is going through a very difficult situation and that reflects slightly on the numbers I’m quoting. Sales grew by 1.2 per cent compared to the first half of 1996. However our operating profit and net income showed a significant decrease.” Ishida said that Kyocera’s profitability indices were not acceptable given that the company was “going through a pretty heavy transition”. He said that the company forecast a reduction in its profit drop from 33 per cent in the first six months to 20.4 per cent for the whole year. The company had traditionally relied on its ceramic packaging business as its bread and butter. But the state of the semiconductor market, coupled with Intel’s move to plastic packaging had affected that division. Nevertheless, sources said that Kyocera had moved its production lines to plastic packaging and Intel was likely to start using large quantities of its products in the middle of the next year. Kyocera’s share of the domestic mobile comms market has fallen because of lack of demand at home. But the company had set aside cash for its subsidiary DDI, which has shares in several Iridium projects and also a cellular network that can be successfully exported, said Ishida. He claimed DDI was completely independent of NTT, the major Japanese telco. “DDI and subsequently Kyocera are destined to be global,” he said. He said: “We will stand behind DDI and we still mentally reserve cash for DDI.” Ishida said: “Last [financial] year, one of our most profitable businesses was telecomms but this year we’re changing from domestic business to Iridium [satellite mobile] business.” The company will launch its handsets in January next year. It is the only company, apart from Motorola, to be in a position to do so. He said that R&D Kyocera had invested in moving from voice to data will be rolled out globally. Although Ishida said Kyocera still believed ceramics would replace many substances over the next few decades, it would concentrate on pushing DDI, in conjunction with Kyocera. It will also strive to support incompatible networks abroad by introducing first a GSM, then other handsets for the local and for the US market. “In the case of Iridium we have a direct involvement and this is a very clear transition for us,” he said. “When we started out, we merely made insulating devices with ceramics. In the 1990s, the key will be telecoms or networks.” ®

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