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The risk of performance fluctuation is explained.
The risk factors that may significantly influence the business contents of the Company and the judgment of investors are as mentioned below, but the risk factors are not limited to the following.
In addition, the items related to the future are based on the judgment of executives of the Company with the available information as of the end of fiscal 2010.
About the business environment- 1. About the Network Services segment
- 2. About the Media & Entertainment segment
- 3. About the evolution and advancement of technologies
- About the competition
- About overseas business operations
- About the profit structure
- 1. About the variation in the number of new subscribers
- 2. About the price trends for each Internet access type
- 3. About the trends in the cost for the use of communication lines, outsourcing, etc.
- 4. About the trends in expenses for advertisements, sales promotion, and agency commissions
- 5. About the Media & Entertainment segment
- About the development and securing of personnel
- About the protection of personal and other information
- About the legal regulations relating to business operations
- About the risk of impairment of goodwill or intangible assets
- About the growth strategies based on investments and M&A transactions
- About the fluctuation risk to the value of securities
- About intellectual property rights
- About the business continuity systems related to disasters and accidents
- About the operation of call centers
About the business environment
1. About the Network Services segment
Currently, the Company operates under the assumption that the upper limit of the number of subscribers to broadband Internet is the total number of households in Japan. As this market is expected to mature, the growth rate of the number of subscribers to our services may decrease. In addition, industry reorganization, including mergers and acquisitions, as well as revisions to government policy relating to information and communications may change the business environment significantly.
2. About the Media & Entertainment segment
In the online game business, there exists the possibility that our operations may be inhibited by issues pertaining to licensed titles whose intellectual property rights belong to a competitor. these issues include revisions to contracts, the rejection of requests for the extension of contract periods, the poor performance of licensors, the loss of development staff, etc. Additionally, Ip titles operations of the Company may be affected because of the slumping business of subcontractors, the loss of development staff, etc.
In the advertisement business, business results tend to be influenced by economic fluctuations. therefore, if the Japanese economy worsens, the Company's performance may be affected.
3. About the evolution and advancement of technologies
If the Company's response to changes in technology is delayed for some reason, the services provided and the competitiveness of the Company itself may degrade. Even if the Company can respond in a timely manner to such changes, costs and investment expenditure may increase.
Recently, we have had to address the issue of the depletion of Ipv4 addresses. As a result, we have been migrating from Ipv4 to Ipv6; however, if the Company's response to this shift is delayed considerably, this may affect the business operations of the Company.
Return to Page TopAbout the competition
Competitors' business policies, prices, services, content, and products may affect the Company's market. Further, there is a possibility that new competitors will emerge and the market environment will change, and consequently competition will become fiercer.
About overseas business operations
Overseas business operations is accompanied by various risks relating to war, terrorism, international politics, regional characteristics, intellectual property rights, exchange rates, etc. If such risks were to be realized, business operations and the performance of the Company may be affected.
About the profit structure
In connection services, which accounts for over 70% of the Company's net sales, when acquiring new subscribers, the Company must incur costs before earning revenue from the new subscribers. this temporary worsening of profitability may affect the performance of the Company. In addition, the fact that revenues are derived mostly from connection services also creates uncertainties about the future performance of the Company.
1. About the variation in the number of new subscribers
The business performance and operations of the Company may be affected if the growth rate of subscribers decreases due to accidents that degrade the reliability of the Company, due to the Company's response to such accidents being either delayed or lacking, due to the maturing of the market, etc.
2. About the price trends for each Internet access type
In response to market trends, including fee changes by competitors, the Company may also revise its fees.
3. About the trends in the cost for the use of communication lines, outsourcing, etc.
Costs depend on the changes in the business environment, and consequently may fluctuate considerably and affect the business performance of the Company.
4. About the trends in expenses for advertisements, sales promotion, and agency commissions
Expenses are budgeted into annual business plans, and managed appropriately in response to changes in the business environment. If competition becomes fiercer due to the emergence of new competitors, rapid changes in the market environment, etc., it may become necessary to increase the budget for expenses.
5. About the Media & Entertainment segment
The primary customers of the Media & Entertainment segment are individuals whose needs and preferences vary broadly. When the Company offers its services, it is important to satisfy the needs and preferences of the customer. However, it is not certain that these services will keep satisfying customers and generating profits for the Company in the future. In the online games business, if the Company cannot increase subscribers as forecast or development does not progress well, business performance and the operations of the Company may be affected. Further, if important data is deleted or services are hindered, the business performance and the operations of the Company may be affected.
About the development and securing of personnel
In Internet-related fields, the mobility of human resources is high, and so it may be impossible to secure sufficient personnel.
About the protection of personal and other information
If personal information leaks from the Company, its websites are infected with viruses, etc., the Company's reliability may be diminished and it may have to provide compensation for damages, etc., and consequently business performance of the Company may worsen.
About the legal regulations relating to business operations
If a dispute regarding legal regulations arises out of business operations, the Company may face legal penalties. there is also a possibility that the legal regulations of some countries will hinder business operations.
About the risk of impairment of goodwill or intangible assets
The Group's assets include the infrastructure of its Network Services segment as well as the online game-related assets and goodwill of its Media & Entertainment segment. Should the Company have to apply impairment accounting to any of its assets, the book value of the applicable asset will be reduced to the recoverable value, and the difference will be recorded as an impairment loss. the recording of such losses could affect the business performance and financial position of the Company.
About the growth strategies based on investments and M&A transactions
If there emerges unexpected problems or business does not progress as planned due to changes in the market environment, competition, etc., the Company may be affected due to the decline in the value of shares of affected companies, in the value of the assets the Company has acquired, etc.
About the fluctuation risk to the value of securities
If the market values of some securities decrease, the value of those assets also declines, consequently affecting the financial position of the Company.
About intellectual property rights
The Company has a cross-license agreement regarding patents with Sony Corporation, such that either party can use the intellectual property rights of the other. However, if Sony Corporation's shareholding ratio with respect to the Company falls to a level below being a majority shareholder, the Company may become unable to use the intellectual property rights under the current conditions.
About the business continuity systems related to disasters and accidents
Communication lines may not be supplied, communication lines or servers may become unavailable, it may require a lot of time and labor to restore systems, or the Company may become unable to restart services, because of emergencies or accidents due to force majeure, or the actions of administrative or legal authorities. In such cases, the ability of the Company to continue business, etc. may be affected seriously.
About the operation of call centers
The decline of the quality of services provided by the call centers may cause a decline in the number of new subscribers and/or customers or an increase in the number of subscription cancellations.
Statements made in this page with respect to So-net's current plans, estimates, strategies and beliefs and other statements that are not historical facts are forward-looking statements about the future performance of So-net. Forward-looking statements include, but are not limited to, those statements using words such as "believe""expect" ,"plans" ,"strategy" ,"prospects" ,"forecast" ,"estimate", "project" quot;anticipate","aim" ,"may" or "might" and words of similar meaning in connection with a discussion of future operations, financial performance, events or conditions. From time to time, oral or written forward-looking statements may also be included in other materials released to the public. These statements are based on management's assumptions and beliefs in light of the information currently available to it. So-net cautions you that a number of important risks and uncertainties could cause actual results to differ materially from those discussed in the forward-looking statements and therefore you should not place undue reliance on them.