2009/2/25 Management Strategy Division 4 th Annual Taiyo Pacific Partners Investor Conference...
-
Upload
morris-cummings -
Category
Documents
-
view
212 -
download
0
Transcript of 2009/2/25 Management Strategy Division 4 th Annual Taiyo Pacific Partners Investor Conference...
2009/2/25
Management Strategy Division
4th Annual Taiyo Pacific Partners
Investor Conference
Company Overview
2
Contents
Corporate Overview
Semiconductor Business
Network Business
3
Corporate Overview
4
Who is MACNICA?
Macnica is one of the strongest value added semiconductor distribution companies world wide. Our specialty is demand creation.
We are an independent company, not part of a keiretsu corporate group.
We have our own sales channels in Japan, Asia Pacific, Europe and in the USA.
We strategically make acquisitions to broaden our client base and further our position as Japan’s leading value added reseller (VAR).
CORPORATE OVERVIEW
5
Basic information
Established: 1972
Market capitalization: ¥20.0bn (as of February 20, 2009)
Sales (FY3/08): ¥154.2bn
Stock information:Market: Tokyo Stock Exchange, 1st sectionIPO: February, 2000Ticker: 7631
Top shareholders#1 41.8% Haruki Kamiyama (Founder and Chairman)#2 8.9% Taiyo Pearl Fund#3 7.4% Japan Trustee Services#4 4.7% Fidelity#5 3.5% Hiroko Kamiyama (Chairman Kamiyama’s wife)
CORPORATE OVERVIEW
6
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
0
200
400
600
800
1000
1200
Sales & employees since establishment
(¥mn) (employees)
◆ Employees
Net Sales
◆ ◆ ◆◆ ◆ ◆
◆◆
◆
◆
◆
◆ ◆
◆
◆
◆◆
◆◆
◆
◆
◆
◆◆
◆
◆
◆◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆
◆
CORPORATE OVERVIEW
7
Recurring Profit
Employees
Results (Consolidated)
Net Sales
Net Income
0
10
20
30
40
50
60
70
FY3/ 04 FY3/ 05 FY3/ 06 FY3/ 07 FY3/ 08 FY3/ 09Forecast0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
FY3/ 04 FY3/ 05 FY3/ 06 FY3/ 07 FY3/ 08 FY3/ 09Forecast
0
5
10
15
20
25
30
35
40
FY3/ 04 FY3/ 05 FY3/ 06 FY3/ 07 FY3/ 08 FY3/ 09Forecast
Units:M$
Units:M$
Units:M$
0
200
400
600
800
1,000
1,200
FY3/ 04 FY3/ 05 FY3/ 06 FY3/ 07 FY3/ 08
¥90/US$
CORPORATE OVERVIEW
8
Revenue by Customer (Consolidated)
Top 10 Customers by Net Sales (FY3/08)
0 50 100 150 200 250
Fujitsu Group
Hitachi Group
Panasonic Group
NEC Group
Sanyo Group
Canon Group
Sony Group
Toshiba Group
Mitsubishi Group
Epson Group
Units:M$
¥90/US$
CORPORATE OVERVIEW
9
Sales Breakdown by Business
Business Structure
Consolidated Net Sales: $1.7bn
Semiconductor Business, 92%
Network Business, 8%
FY3/08 ¥90/US$
CORPORATE OVERVIEW
10
Semiconductor Business Overview
1. Industry Trends2. Competitive Advantages3. Our Strategy
11
1. Industry Trends
A Global Market
M&A and Consolidation
System in Chip
New Technology
SEMICONDUCTOR BUSINESS1. Industry Trends
12
A Global Market
SEMICONDUCTOR BUSINESS1. Industry Trends
JAPAN16%
Asia56%
EUROPE14%
USA14% USA
27%
EUROPE23%
JAPAN25%
Asia25%
Demand Creation (Design)Consumption
Area Consumption Demand Creation (DC)
DC Growth/yr
USA 14% 27% 5-7%
Europe 14% 23% 3-5%
JAPAN 16% 25% 5-7%
Asia 56% 25% 10-15%
Total 100% (250B$) 100% For next 5 years * Macnica estimate
13
M&A and Consolidation
SEMICONDUCTOR BUSINESS1. Industry Trends
Macnica a driving force in industry consolidation
There have been many M&A’s creating large suppliers of more standardized products (i.e. ASSPs) and large distributors focusing mainly on logistics.
There has yet to be significant M&A activity for high-value added customizable products (i.e. PLDs – Macnica’s core competency) or for companies focusing on demand creation like Macnica.
With Macnica’s acquisition of Cytech (Nov. 2008), the leading Chinese value-added reseller, Macnica is leading the industry in becoming the first Japanese VAR to acquire a company in the Asia Pacific region.
14
System in Chip (SiC)
ASSPs: standarized by application – many different kinds
Programmable Chips: PLDs (programmable logic devices), etc.
Because PLDs and other chips are programmable, there is an opportunity to add value when selling to customers.
SEMICONDUCTOR BUSINESS1. Industry Trends
Two main types of SiC
15
New Technology
MEMS: InvenSense, SiTime, Akustica etc
LED: Philips Lumileds, LEDEngin
SEMICONDUCTOR BUSINESS1. Industry Trends
The other way Macnica can add value is by finding interesting partners overseas and introducing their innovative products to buyers in Asia
MACNICA is picking up new lines of not only the innovative advanced technology, but also the new concept technology products shown below
16
2. MACNICA’s Competitive Advantages
Good Product Lines
Strong Balance Sheet
SEMICONDUCTOR BUSINESS2. Competitive Advantages
Strength:
17
Strength: Technical Capabilities
Sales & Assistant590
Engineers230
Engineers230
Semiconductor BusinessEmployees
FY3/08
SEMICONDUCTOR BUSINESS2. Competitive Advantages
Macnica has more qualified field application engineers (FAE) than its competitors, enabling us to truly add value to our customers in helping them design innovative products.
18
Macnica’s target markets are where we can add value
Strength: Less Commoditized Products
Demand Creation Value
DRAMDRAM
CPUCPU
Macnica’s TargetMacnica’s Target
FLASHFLASH
LOGICLOGIC
Value Added ProductsValue Added Products
Value Add comes from excellent technical
capabilities
Value Add comes from excellent technical
capabilities
No Value Added
No Value AddedAdvanced
Technology
SEMICONDUCTOR BUSINESS2. Competitive Advantages
19
Strength: Japan’s largest PLD distributor
SEMICONDUCTOR BUSINESS2. Competitive Advantages
ALTERA52%XILINX
40%
ACTEL3%LATTICE
5%
ALTIMA39%
TED22%
ELSENA4%
OTHERS12%
AVNET5%
PALTEK9%
Marubun9%
JAPAN market size ($650M)
Supplier market share for PLD
VAR market share for PLD * Company estimate
Xilinx is number one globally, but Macnica has propelled Altera to #1 position in Japan
FY3/08 ¥90/US$
Elsena + Altima = 44% Macnica market share
20
Strength: Original Solutions
High Performance Dual Core DSP Reference Design
MARBO-3 MARBO-3EX
Macnica also offers original development and solution kits to proactively meet client needs and shorten time-to-market
SEMICONDUCTOR BUSINESS2. Competitive Advantages
21
Strength: Finding new products from global ventures
FY3/08
SEMICONDUCTOR BUSINESS2. Competitive Advantages
Macnica’s network and ability to spot new technology make us the most capable distributor to pick up excellent new ventures world wide.
22
Strength: We are a key partner to global leaders
* Internal competition is avoided at MACNICA by division company system
Categ. Line Industrial Network Infra. Automobile
PLD ALTERA ★ ★ -
Analog Analog Devices ★ ★ ★
National Semiconductor ★ ★ -
RICOH ★ - ★
Infineon - - ★
ASSP Broadcom - ★ -
MARVELL ★ ★ -
PMC Sierra ★ ★ -
SEMICONDUCTOR BUSINESS2. Competitive Advantages
23
Strength: Strong Balance Sheet
Capital adequacy ratio: 70 %
From a position of no debt, we took on a $100mn loan to finance half the acquisition of Cytech.→ lower cost of capital
Remain in a good position for further M&A with over $170mn in cash as of end-December 2008.
SEMICONDUCTOR BUSINESS2. Competitive Advantages
24
3. Our Strategy
Market Focus
Globalization
Field Programmable
SEMICONDUCTOR BUSINESS3. Our Strategy
25
Market Focus
Industrial Applications:
- Medical equipment, instruments, testers, robotics, FA, etc.
Network Core Infrastructure:
- Telecom & Datacom
Automobile electronics
SEMICONDUCTOR BUSINESS3. Our Strategy
26
“Broad-Base” definition:
Mid-small size companies; under $10mn in annual procurement (SAM)
Large target market:
2000 potential customers
Macnica’s strategic targets over the next year:
Boost stability: Reduce sales to top 20 customers from >70% under 50%
Boost margins: Raise broad-base sales from 20% 40%
Market Focus: Broad-Base Customers
SEMICONDUCTOR BUSINESS3. Our Strategy
We are attacking a new, exciting market that we feel will boost Macnica’s profitability and provide increased stability.
27
Globalization
1st step Asia, next step Europe
M&A targets are demand creation companies, not simply fulfillment (no plain distributors). We are looking for value-add.
Cytech background:
- Cytech is the most technically capable VAR in China
- Macnica is the 1st Japanese VAR to conduct an M&A in China; we were able to do this because of our industry-leading technical capabilities and financial strength.
SEMICONDUCTOR BUSINESS3. Our Strategy
Our acquisition of Cytech (Nov. 2008) is the first step in our global plan
28
Network Business
1. Business Model2. Competitive Advantages3. Strategy
29
Two Business Models: OEM and Channel
OEM Direct Sales Resellers
FujitsuNECHitachi
Mitsubishi ChemicalKDDINRI
Fujitsu GroupNEC Group
IBMNTT Group
Unisys Group
Soft BankDIS
System Integrators
Carrier & ISP
Channel Business ModelChannel Business ModelOEM Business ModelOEM Business Model
NETWORK BUSINESS1. Business Model
30
Sales by Product
Hardware 50%Hardware 50%
Software 22%Software 22%
Service28%Service28%
NETWORK BUSINESS1. Business Model
Sales Breakdown by Products
Net Sales: 140M$
FY3/08 ¥90/US$
31
Consistently high profitability since 2005
Net Sales & Gross Profit
0
20
40
60
80
100
120
140
160
FY3/ 04 FY3/ 05 FY3/ 06 FY3/ 07 FY3/ 0835
36
37
38
39
40
Net Sales
Gross Profit
¥90/US$
Units:M$ Units:%
NETWORK BUSINESS1. Business Model
32
Competitive advantages of MACNICA NETWORKS
Excellent engineering support capabilities
90 engineers: Hardware/software design and support engineers
Software Localization- Japanization (Message, GUI to support 2byte
code characters)
Software/hardware porting to Japanese platforms
OEM customization
NETWORK BUSINESS2. Competitive Advantage
33
Strategy: Focus on two target applications
Two key target markets:
1. Security Related Products- McAfee: Encryption Software- BlueCoat: Web Security Solution
2. Integrated Server Control Solutions- BladeLogic: Software to automate server operations- Mimosa: Email Archive Solution
NETWORK BUSINESS3. Our strategy