| To Our Stakeholders:
Today, we submitted the delayed Third Quarter Report for the Fiscal Year Ending August 2010 to the Kanto Financial Bureau. The Tokyo Stock Exchange subsequently announced its intent to cancel the designation of security under supervision (under confirmation) effective August 14, 2010. We are also required to submit an improvement report by August 27. The company is taking to heart the issues in the business, such as the causes of the inappropriate accounting treatment reported and identified by the external review committee as well as the corporate management organization of the company, and intends to rapidly implement measures to prevent any recurrence and to reinforce thoroughly the governance function for group companies. As also announced today in the release entitled “Recording of extraordinary loss, revision to full-year, performance forecast, management improvement plan including compensation cuts to executive board members,” the steep decline in the sale of conventional mobile phones in the current mobile phone market places Acrodea under severe operating conditions. Consequently, since we will concentrate on products with high profitability for these conventional phones, an extraordinary loss has been entered, primarily the result of impairment losses of software assets. In addition, a delay in large-scale global business for the smartphone segment has affected the performance forecast for the current year to the extent that unattainable net sales will deliver a net loss. I apologize for the large downward revision in performance. As near-term corporate policy, therefore, Acrodea will be selective and focused on its middleware licensing business, make a large shift in product and human resources from conventional “Galapagos” mobile phones to smartphones, and fully concentrate management resources towards solutions for smartphones like the iPhone and Android. In particular, the marketplace business is considered a vital opportunity for smartphones that can utilize the company’s products. We intend to apply our efforts for broad development with partner companies. The EC Business is improving in profitability as successful cost reductions thus far begin to show. With improved success in signing new customers, we intend to continue nurturing this segment as a steady revenue stream for the future. As described above, we intend to extensively review corporate strategy, proceed with the appropriate positioning of human resources, and introduce compensation plans linked to performance to build a new organization with a lean structure for generating income. All executive management and employees of the Acrodea Group are poised to produce results and to recover the company’s trust. On behalf of the company, I look forward to your continued guidance and direction, as well as your support and understanding at this time. |
Junya Tsutsumi |
