Oki Announces New Business Plan "PHOENIX 21 SKY HIGH"
Creating a Top-Tier Company Based on Network Solutions

The Phoenix 21 Sky High is modeled on the successes of the existing Phoenix 21 business-restructuring plan of fiscal 1999-2001. "We have successfully implemented the Phoenix 21 business strategies, and through structural reforms, enabled the company to achieve a favorable consolidated recurring profit in fiscal 1999," said Oki Electric's President & CEO Katsumasa Shinozuka. "Today I am announcing this new wide-ranging business strategy that will bring us significantly closer to our target of creating a top-tier company."

The average annual growth target for the entire Oki Electric group has been set at over 6%, and it is hoped that by fiscal 2005 the group can achieve consolidated revenues in excess of 1 trillion yen and a return on equity (ROE) of 12%.

Business Targets

Oki will increase its corporate value by improving profitability and growth, which will be measured by ROE and revenue growth rate respectively.

FY2005 Targets

Consolidated	FY 2001 projection	FY 2005 target
Revenue	780 billion yen	1,000 billion yen
Net profit	9 billion yen	30 billion yen
ROE	6%	12%
Debt/Equity ratio	2.0	1.3

Growth Strategy for Main Business Domains

Oki Electric has as its corporate vision the capability of providing network solutions that are essential to business in the e-society. Part of its growth strategy will be to expand its business from provision of IT solutions centering on products to e-business solutions focusing on services. Another part will be to concentrate on four major business domains for network solutions, in which it excels. Three of these domains are regarded as "Service Bridges," a term used by Oki to describe services that provide platforms, applications and solutions over a network infrastructure to realize the e-society. Strategy for the four domains will include a "niche leader" strategy that establishes leadership in specific markets and products, and a "niche master" strategy of selecting and establishing mastery over specific sectors in which the company holds edges.

The four major domains are:

1. Customer Contact (Service Bridge, Niche Master)
   This domain will provide Oki Electric's strongest customer base, i.e. financial institutions, travel agencies, and government agencies, with customer contact solutions required in e-business. Included herein are branch office and ATM solutions, real channel solutions, e-channel solutions, and backyard solutions that support customer management and back office processing.

2. Multimedia Messaging (Service Bridge, Niche Master)
   This domain will provide secure and reliable messaging services needed in the personal-mobile communications age through integration of various media such as the Internet, mobile phones, fax and voice mail. These services will be built around computer-telecommunication technologies such as VoIP and computer telephony integration (CTI), in which the company has been successful with its CTstage products.

3. Network Transactions (Service Bridge, Niche Master)
   This domain will provide advanced e-payment and security solutions that are indispensable for network-based transactions and information exchanges, as well as e-business/e-government platforms and applications for network transactions.

4. Network Infrastructure (Niche Leader)
   This domain will provide the network service providers and the enterprises with IP-network integration services. Also, utilizing Oki's advanced telecommunication technologies, edge-network products such as software switches and the optical access-network devices will be delivered for use in the ubiquitous broadband IP-network era.

The following three business domains will support the network solutions mentioned above:

1. Printing Solutions
   Oki will continue to develop color page printers with its leading-edge LED head technology and provide competitive products that meet global market needs. It will also make efforts to penetrate the Chinese market for black/white serial impact dot matrix (SIDM) type printers as the world's second-largest vendor.

2. Silicon Solutions
   Oki Electric will strive to expand the system on chip (SoC) business focusing on digital communications. In the dynamic random access memory (DRAM) market, the company will specialize in application specific DRAM (ASDRAM) maximizing Oki Electric's advanced proprietary process technology.

3. Optical Components
   Oki Electric will concentrate its resources on sectors such as gallium arsenide (GaAs) chips and optical modules, and will strengthen its North American operation that has acquired major customers.

Management Measures to Support Growth

Business growth will be promoted by focusing on network-based corporate management, and various other measures.

1. Network-based Corporate Management
   Oki will conduct network-based corporate management, which allows a more efficient in-house company system introduced in fiscal 2000. In-house companies will be dynamically reorganized into different sizes best suited to their business models and business scales to quickly meet the market needs and speeds. Two in-house companies, System Solutions Company (SSC) and Network Systems Company (NSC), which form the core network solution business divisions, will be combined and restructured in fiscal 2002. Oki will also promote the establishment of additional in-house venture companies by increasing the number to ten (currently three) in the future, while administrative functions that are common group-wide-including personnel, accounting, financing and IT-will be shared or outsourced.

2. Measures for Business Growth
   R&D investment (internal and external) will be increased to 7% of the revenue, and procurement capabilities will be enhanced by using Web electronic data interchange (EDI) and the e-marketplace to achieve an annual 10% reduction in procurement cost by 2005. Production operations of both equipment and semiconductors will be restructured into the domestic and overseas facilities, which include partner companies, to achieve best quality, cost, and delivery.

3. Reinforcing Management Operations
   Oki Electric has implemented performance-based management using a balanced score card for performance evaluation and improvement. In order to promote its corporate brand image as a network solutions provider, the company will establish a corporate branding office. It will also go ahead actively with environmental management by the promotion of Eco Plan 21.

4. Enhancing Corporate Governance
   Oki Electric will appoint an outside company director from fiscal 2001. It also plans to establish a management advisory committee and a compensation committee.

For more information, please click HERE

[47.6KB]