Manabu Miyasaka – President and CEO Shin Murakami – Chief Mobile Officer Tomoaki Tanida – President, Central Services Company

Keiichi Yoneshima – Barclays Securities Yoshitaka Nagao – Nomura Securities Shinsuke Iwasa – Mizuho Securities Takayoshi Koike – Goldman Sachs Sumito Takeda – UBS Yosuke Tomimatsu – Merrill Lynch Hiroshi Naya – Ichiyoshi

My name is Miyasaka. Nice to see you again.

Now, I would like to give you the business results of Q2 of FY 2012. That will be my first part of the presentation.

And in the latter half, we will talk about what we did and also what we plan to do in the next quarters. So, I will be focusing more on the qualitative factors.

Now, first of all, let’s take a look at the numbers related to Q2. In terms of the revenue, it was ¥78.7 billion and increased 6.8% year-on-year.

Operating income ¥43.2 billion and ordinary income increased by 7.2%, recording ¥43.9 billion. And quarterly net income was – it was ¥27.1 billion, an increase of 11.8%.

In terms of quarterly revenue growth, we have the comparison of year-on-year focusing on Q2. And we see that there is an increase of revenue each term.

Now, in terms of the growth rate – in terms of the quarterly revenue increase, we slightly decreased to 6.8% as compared to the previous quarter, but all-in-all, relatively speaking, we are maintaining high growth. This shows the breakdown of our revenue.

All-in-all, there was an increase of 6.8%, an increase of ¥5 billion. And you see the red portion which is the Marketing Solutions, which is information listing and advertisement.

And listing advertisement did very well, so there was an increase of 10.4%. And Consumer Business is EC and digital content and digital content did well.

So, there was an increase of 2.8%. Started from this quarter, we have a category called Other Businesses, which comprise of settlement and finance businesses.

Now, taking a look at the Marketing Solution Business, I would like to focus more on the advertisement-related revenue, which is the core. Red is listing and gray is display.

In terms of the advertisement, we were able to increase by 10.7%, recording an increase of ¥4.3 billion and listing advertisement increased by 14.8%. Especially, smartphone advertisement did very well.

On the other hand, in terms of the display, it increased slightly as compared to the previous year. In terms of the Brand Panel, we did not do very well.

Therefore, display did not do as we have expected. In terms of the display, starting from September, we are conducting different pilot tests to enrich our expression used in the advertisement.

And we can further advance our social aspects, so that we will be able to boost our display advertisement. Now, let’s take a look at mobile phone advertisement-related revenue.

The red portion is smartphone mobile revenue and gray in the feature phone. And the total is the mobile segment as a whole.

As you can see, smartphone grew very much, whereas the feature phone decreased. And this is the trend you see in the market at large.

In terms of the smartphone, the advertisement revenue ratio was 3.4%, but now it is 12.5%. Now, let’s take a look at quarterly advertising-related revenue year-over-year growth trend.

And red one is the listing. It is 14.8%, very high.

On the other hand, display is in gray and it is relatively flat and recorded a slight increase. Now let’s look at the listing advertising revenue and year-on-year change by industry.

As you can see, the overall increase was ¥4.2 billion or 14.8%. This is a comparison to the previous year.

Previous year, there was a earthquake and tsunami. And because of that, transportation and leisure was very weak, but there was a rebound from that.

In other all sectors, we saw the increase. Now turning to display advertising revenue, again, there was a impact from the earthquake last year.

So, based upon that or comparison to that, there was a recovery. In finance, insurance and securities, there was a lower ad placement by some advertisers.

And there was a decline of ¥490 million. And as a whole, there was a increase above ¥100 million or 0.9%.

Turning to e-commerce transaction value. Concerning the e-commerce, we summarized into this chart.

As in the first quarter, we tried to control the promotional expenses focusing on the ROI. And last year, actually, we focused more on the transaction value rather than the profitability.

But this term, we focused more on the profitability. And as a result, the transaction value slightly declined year-on-year.

But, having said that, if you look at the percentage of the shopping and auction via smartphone, has increased year-on-year and it has almost doubled to 19%. Now, looking at the quarterly profits trend, the second quarter operating margin was 55%.

Now, this shows the growth rate of the operating margin is lower than the previous year, where the growth was lower. However, if you look at the past four years, it’s a relatively good number.

And based on that, this is a second quarter actuals as well as forecast. In all of those items, it was within the range of the forecast.

However, as you can see on the right-hand side, display advertising was more sluggish than our expectations in the second quarter. As for the second half forecast, the revenue, the range is ¥162.6 billion to ¥168.9 billion.

It is about 103% to 104%. And the rest, I think are self explanatory.

So, I would skip. And this is the full year forecast.

This is a full year reference. Now, based on those results, this is the forecast for the cash dividend.

At the end of the year, ¥370 to ¥378 per share is expected cash dividend. So, that concludes the business results.

So, I have highlighted on the performance of Q2. So, now, I’d like to switch gear and talk about qualitative aspect of how we did in Q2.

In April, we changed the organization and the management. And, as you know, we have new heads for the company.

And so, we believe that we were able to have the passing of the torch successfully. And having continuation from the previous management is important.

And we were able to increase revenue as well as profit. And there was no chaotic situation whatsoever.

And on top of that, we changed the company structure and we have a new personnel system. And so, in terms of the transition period, so to speak, I believe that we were able to transit to the new management very successfully.

This is the current structure. Under me, we have a COO and we have CFO as well as more by a CMO.

And we have diffident company structure, as you can see over here. And this time around, we have created a new company called Central Services Company.

What is this company in charge of? Simply put, we want to reemphasize the supplement and financial-related products.

In Yahoo! JAPAN, we have about ¥1 trillion monetary transaction.

And also, in the external market, we do have a very large market. Therefore, we would like to further grow our supplement and financial-related products.

In terms of the Internet and the financial services, there is a very good synergy. We do have different monetary transaction going within the world of Yahoo!.

And, therefore, we would like to leverage on the Central Services Company, so that we can grow as a segment. As of October 1, we started our new personnel system.

And simply put, we have two axes. One is Yahoo!

Value and a profit contribution. And these two aspects will be considered in providing evaluation of each employee.

And without any confusion, we are implementing this new personnel system. We have a major objective of doubling our operational profit by the year 201X.

And every year, we have to increase by 11%. And we are slightly lagging behind.

But we believe that by the year 201X, we will be able to double our operating profit. Now, in order to attain this goal, what are we planning to do?

There are three major strategies that we implement. First of all, it is dubbed as Only 1 Strategy.

We would further strengthen our services that we have very good foothold and try to concentrate on the area and have alliances with external partners that provide new services. And also, we would like to have The Most Powerful Tag Teams with other companies.

And also, we will try to explore new orders and dub that strategy as Unexplored Frontier Strategy. Let’s talk about Only 1 Strategy.

I’m sure that you’ve seen this pyramid in the past couple times. We have over 150 services and we categories those services into Y!1 to Y!C and C stands for challenge.

And so, we have a special criteria to rank our existing services. And we have the competitive landscape within the company.

And the more you have the Y!1 category, the more resources will be allocated to that area. And we have started the system as of this past quarter and allocated the resources accordingly.

And there was major shift of people within our company, but we were able to allocate appropriate number of people amongst these categories. Between Y!1 and Y!2, we have about 25 some services and page view and unique users and daily unique browsers.

About 80% of our business is contributed to these two categories and we would like to further grow these Y!1 and Y!2 altogether. And in terms of Y!2, which is top 20, we have tried a different project.

And let’s talk about some particular cases. We have a Rich Ad on the third page regarding the Brand Panel.

We want to make it more conspicuous and have a very strong and everlasting impression. And from mid-September, we had a pilot run of this and the test result was relatively good.

And we are planning to have the official marketing of this advertisement. And also, we have smartphone dedicated display advertisement as well.

Now, let’s talk about Auctions. We did different projects.

And in terms of confirming ID, say, you want to be a seller in the Auction. And in the past, you have to receive a mail from us.

And then after filling out that point, you will be able to be a seller. And it took about a week to complete this process.

But by having a simple registration, because of this cumbersome process, we encountered some decrease in the new seller. But by using these mobile devices, within 30 seconds, you will be able to start out as a new seller.

The more new seller you have, there will be more new items. And more new items there are, there will be more buyers and there will be an increase in the transaction value.

So we have to have a long-term aspect in terms of this process. And we were able to come up with this new process facilitating the new seller participation.

And also, we started out a new marketing site called Yahoo! Bazar.

And you can participate as an individual seller with a fixed price. And we also renewed our Yahoo!

Premium membership services. In the past, for the PC Internet users, we provided a very special Internet experience, if you become the Premium member.

But for the smartphone users, it seems like there were not many benefits that can be enjoyed by them. But we came up with a very special Internet experience via the smartphone.

And since last week, we started to enable smartphone users to enjoy more content. And so, as of October 1, because of the increase of the content to be enjoyed, we increased our membership fee by ¥30 to ¥380.

And also, we actually expanded our membership acquisition activities. In the past, it was only limited to the virtual world, but now we can use the SOFTBANK cell phone stores, i.e., the physical store to acquire new members.

Other than what I have already explained to you, there are many new services with large volume of traffic. And there are more accesses by the smartphone.

Since that as a backdrop, we have to have a very robust like facility. And Shirakawa Data Center started its full fledged operation already.

And so, we have the Tokyo Metropolitan Area and we have Shirakawa. And in the west, we have Kitakyushu.

And so, we have a tripartite relationship, so to speak, amongst the data centers. And we have different electric grid.

And so, if one power company goes down or having problem providing electricity, we can hedge risk by having three separate regional data centers. As I have summarized to you, what kind of new enhancements we made for the top 20 services by ourselves.

And I’m sure that you are interested in the alliances that we have with other parties. And so, in terms of the areas that we are not strong in, we have partnership with external parties to strengthen that domain.

Let me explain to you some representative cases. Firstly, tabelog.

For our Yahoo! JAPAN start page, we started to provide the services to tabelog and start in September what happened to Yahoo!

Gourmet. Well, in the past, we solicited people to access Yahoo!

Gourmet. But with the advent of the linkage with tabelog, more and more accesses were made to tabelog and also the volume of Yahoo!

JAPAN start page further increased. And we will be able to increase our advertisement revenue and share that with tabelog.

Now, let’s talk about COOKPAD. And in terms of the background, it is same as tabelog.

In terms of the Recipe, we were not very strong, so we decided to partner with COOKPAD, so that we can provide better services to our Yahoo! subscribers and users.

And from Yahoo! start page, instead of soliciting to Yahoo!

Recipe, we can have users access COOKPAD. And I believe that we improved the convenience level amongst the users.

And also, we can actually further expand our display advertisement products. In terms of the advertisement technology, we started working with Criteo, which is the French company who is best known in re-targeting advertisement.

And since the end of August, we started having the advertisement services. And from this month, we would like to provide advertisement via Yahoo Japan Corporation.

In the past, we have created advertisement by ourselves within the company, but, of course, we will keep the core business amongst ourselves. But then, if there are any technologies that are provided by the third-party, we will partner with them.

And so, we will mix and match our best technology with external parties’ best technology to give you the best world. Also, another example is Crocos.

We invest in Crocos. In Japan, Crocos is the first certified marketing developer by Facebook.

And in Yahoo! JAPAN, there are several social media related initiatives.

And we have – the Crocos has a lot of know-how. So, we decided to invest.

Many things that we are thinking about. First of all, what we started was to utilize the Facebook pages over the – through this for the e-commerce assistance service.

Now – and also, we would provide the new post of the Facebook on the Yahoo! JAPAN, used to check on the emails and so forth.

But as a one stop, you can actually utilize this function and we provided this. And at the same time, the real-time search is what we have.

And now the public information on the Facebook pages and also the Twitter information we already have, can be combined. So we are the – now have the service covering data from both Facebook and Twitter.

Now, from this part, I’d like to talk about the alliance with non-Internet companies. The first is the collaboration with SOFTBANK.

We’ve started several things. First of all, this is the premium membership acquisition at the SOFTBANK stores.

And for the October, we expect to double new subscribers. So we can create a new channel, which did not exist until now.

Now with ASKUL, this is another example. This is a LOHACO service we started on the 15 of this month.

We have not seen a big difference of the traffic, but we have not seen the business related pages, for example, settlement and digital distribution. And we are gradually seeing the increase.

And we’d like to validate whether the business system will function well and we expect that the traffic to increase towards the end of year. Now with CCC, this is about the Point system.

On the 1 of October, the Point business was spun-off. So now, we are doing the final negotiation for the 15% investment.

And from the spring, the Yahoo! Point will be changed to T-Point and it will become TFID.

And the third area is Unexplored Frontier. First YJ Capital Inc., which is 100% subsidiary of ours, was started.

And this is for the venture – this is a venture capital business, mainly targets the domestic venture companies, for example, Yahoo! JAPAN’s businesses.

And if there is a potential cannibalization and might have a big potential in the future and in that case we can utilize Yahoo! YJ Capital, so that we can avoid any overlapping of – or conflict of the businesses.

So I talked about three strategies and the progress. Next, overarching initiatives.

Using the smartphone is what we are doing. So under the CMO, we are making progress with the smartphone growth initiatives.

First of all, DUB trends is growing at a very fast speed. Now application downloads, in the first quarter it was 30 million and second quarter has grown up to 40 million downloads.

The major factor is the maps and also during the typhoon season, the disaster prevention application. For example, to prepare for the torrential rain, there is an application for that and that was downloaded.

And now out of this 10 million growth, most of them come from through the alliances. For example, KAKAO JAPAN and Tapnow have been started.

But the DECOPIC, for example, this is for the picture taking with the Android. This has been very significant to come up with a 10 million increase and eight million downloads already made for DECOPIC.

It’s very popular application. And by investing in this, this is the area that we have some weakness.

That is, for the young girls and women, the acute UI interface, the know-how, is something that we’d like to learn from DECOPIC. The second major investment or alliance is with KAKAO JAPAN.

Right now, the communication via smartphone is growing rapidly. And until now, we had the Yahoo!

Messenger and Yahoo! Mail.

Those are the communication we provided. But we wanted to have a smartphone-specific communication, which we didn’t have until now.

So we started to work with KAKAO JAPAN to provide such service. Next is the alliance with ACCESSPORT.

Yahoo! Market plus is a temporary name or in one word, this is the – we have Android device.

We – you delete or add the applications or change the application or design, or changing the directory. This is almost like the Android version of the iTunes.

It was not very convenient until now, so this software enables that. You install this software.

And if you have the Android device, you can do the deletion of the application or sorting of the pictures, photos. So we plan to start this early November.

So I talked about the smartphone-related initiatives. The alliances, investments, many of them are those, but also we are trying to improve the specific services every day.

So we saw the increase through the smartphone in the second quarter. Hopefully, I summarized those strategies in one sheet of paper, Only 1 Strategy, The Most Powerful Tag Teams and Unexplored Frontier, as far as smartphone growth initiatives and they are divided into advertising, e-commerce and others.

Actually there are some cross-border initiatives, but I wanted to make it – make them easier for you to understand by summarizing this on this page, one page of the summary. And that concludes the first presentation and we would like to now entertain questions.

If you have any questions, please raise your hand and wait for the microphone and give us your name and affiliation before asking questions. If you have multiple questions, please limit the number of the questions, one question at a time.

So, any questions?

Thank you very much for your presentation. I’m Yoneshima of Barclays Securities.

I have several questions. So let’s take one at a time.

In the supplemental information, I am looking at the PL. And in terms of the second quarter revenue, there was a slight increase and tell me the reason behind that.

And also you have the Shirakawa Data Center operation. And do you believe that the cost of sales will increase because of that or this is just a temporarily aspect?

In terms of cost of sales, if I may explain to you the breakdown, we have the sponsor search and we have to pay to Google. And in terms of the rate, once we go beyond a certain threshold, we have to pay more in terms of the percentage.

And in terms of the revenue increase, it was because of the sponsor search. And because of that SS, cost of sales was impacted.

And from the second half onward, in terms of the forecast, maybe I should have explained. In terms of the listing advertisement, it will be the driving engine.

And so in terms of the cost of sales, there is a potential that there might be an increase of cost of sales in the future. But it will not increase in a large magnitude, so it will be 0.X percentage point increase of the cost of sales.

Now, in terms of depreciation of the new data center, it will be included in SG&A and not in P&L.

Now, moving on to the second question, I understand that Brand Panel suffered. And in your explanation, some advertisers decided not to have the Brand Panel.

And is it a peculiar situation of a particular advertiser or do you think this actually categorizes the entire PC market in terms of the advertisers. You started the display advertisement of the smartphone and you enriched the advertisement as well.

And in terms of Q3, do you think there will be a better rosy picture for the growth rate?

Now, if you have a long-term perspective or vision, so to speak, we have the branding as well as display advertisement segment. And we have to increase the awareness and we have to increase the branding advertisement.

And whether it’d be TV or Internet, we have to invest to some extent. And so if you want to have being searched, you have to have your name known amongst the users.

So you need to have the branding advertisement to make known your name. And, but, of course, we are impacted by the economic environment.

And if the economy is sluggish, instead of focusing on the brand advertisement, sponsors tend to have direct PR focusing on a particular product. So listing advertisement and sales promotion advertisement will have more budgets as compared to the brand advertisement during the sluggish economic environment.

But then in terms of the branding and display, it is a very large market. And so I think we should not just think about the short period impact.

Now, in terms of the latter half, the display advertisement will increase dramatically? I think that is too optimistic a view.

So in terms of the second half, we would want to maintain the current level, so plateau. And so on the other hand, we would like to focus more on the smartphone, so that can be a driving engine for further growth.

Thank you. Third question, little details.

Yahoo! Premium, we tried to acquire it at the store.

With the SOFTBANK, for example, when there is a new customer acquired, I think there is initial investment in order to get the ¥380 customer. So what is the model?

Could you talk about that?

This is the contract between the two companies. So I cannot disclose the details, but we would – we share the revenues.

So it’s a revenue share.

It’s a continuous revenue share. Is that right?

Yes, it is.

The fourth question, sorry, it’s also about the relationship with SOFTBANK. The other day, the Sprint was acquired by SOFTBANK.

And I think you have a long-term impact of ¥120 billion and do you think you will get that on the 1st of March or will there be a purchase of the preferred shares as you did in the past?

Well, it’s stipulated in a contract. Therefore, we plan to pay that amount on the specific date.

But you have a lot of cash, so would it be possible for them to say – to give them the financial support? Do you think there is a possibility for that?

Well, they are a listed independent company. So, of course, the decisions need to be made one at a time.

Thank you.

I am Nagao of Nomura Securities. I have three questions.

Firstly, I want to ask you about the advertisement, especially about display. In the second quarter there was a increase of 0.9% as compared to the previous quarter.

But PC might be the contributor to the degrees and I want to confirm. And after July, you have the display advertisement plan.

And you want to maintain the level as compared to the previous year. And I want to know what kind of focus you have for the second half?

I want you to give me the details of your forecast.

Well. In terms of device, in terms of PC display advertisement, it is blocked.

And in terms of feature phone, the display advertisement plummeted. And smartphone actually made up for that loss.

Therefore, in total, there was a slight increase. So, it’s not flat but rather it was a slight increase.

Trend-wise, in the second half, I guess the same story will be depicted by each device category. So, in terms of the forecast, year-on-year it will be flat.

Thank you. Second question pertains to Auction.

In terms of the decrease, it decreased by 2.6%. Not only fee, but for bid you have the different businesses.

It’s not only the product, but you can help out with the moving and then, clean up of the room after the moving out. And in terms of the Auction, what is the strategy for recurring the business, whether it be business to consumer or business to business?

Well, in terms of the Auction, it is a retail-oriented business. And so, it’s not that you have a killer strategy.

You have to take a day-to-day look and try to improve on a steady basis. And so whether it be Game or other Auction business, we sell products for the end users.

So we have to add one enhancement after the other, so steady operational improvement is the most important aspect. And we do not only sell products, but we provide services as well, for example, helping with the move.

And also in terms of content, we say we can take photos. And those should contribute to the sales figure.

And we would like to increase the varieties of selections. And in terms of the second hand, there might be rare used item.

Well, those can be for bid, but then we have general used products and we would like to increase the coverage of the used items as well. And so, we did already prepare ourselves for those businesses.

And those new endeavors are important, but more than that I believe that day-to-day steady effort that we put in improving the business is most important.

Thank you. Then last question is about the investment you made to KAKAO JAPAN.

We have LINE and other similar services and I believe that you’re trying to compete with those similar services. Or you have current Yahoo!

Services and you want to increase the breadth and depth of your current Services, which is the reason investment in KAKAO JAPAN?

And then maybe CMO, Mr. Murakami can chip in.

Well, media say that this is to come up with similar services vis-à-vis the competitors. But we have many Yahoo!

Mails and we have many Messenger services. And whether it be Mail or Messenger, those were created during the era of PC-oriented environment.

But Yahoo! is trying to focus more on smartphone and come up with smartphone native services.

And we wanted to come up with our own services and we did and – but we believe that by joining up with a third-party will facilitate the launch of new services. Therefore, we invested in KAKAO JAPAN.

My name is Murakami. I am CMO.

As mentioned by CEO, Miyasaka, first of all, we have lines in other competitors. And more than thinking about the competitors, we believe that a smartphone is becoming the major device and that is exploding the market.

And NHN is taking the lead. And in terms of that trend, Yahoo!

JAPAN has to catch-up with that trend. And that is why we decided to invest in KAKAO.

And also, we have Yahoo! Mail which is PC-oriented.

In Japan, we have Gmail and other competitors, but Yahoo! is more supported by the users and that is the backdrop.

When people shift to smartphone, what will happen to them? We know that there is need amongst the users.

And so we have to take action immediately. Therefore, for a win-win project, we decided to have partnership with KAKAO JAPAN.

Thank you.

Thank you very much. Any other questions?

Iwasa from Mizuho Securities. First question is about the second half revenue increase of 4% to 8%.

It’s a range quite wide, seems. So the advertising and auction, shopping, which do you think it would contribute the wide range, the reasons behind the wide range as much as you can answer to this question?

Well, the upper limit and lower limit, how we determine this range, our policy is that, for example, at a lower limit, we look at previous year’s growth and we try to be higher than the previous year’s lower limit. So we do not always determine the range to start with.

As for the range, relatively speaking about the display advertising, this is likely to be impacted from the economy. So the range is wider.

But for others, it is not so high in terms of the differences of the range.

I see. Maybe to have a wider perspective, in order to double the operating income in the long run you need to increase that 10% – by 10% each year.

So, at the beginning of the year, you mentioned that the second half – the growth of the profit will be higher. So, we expect – I expected double-digit increase.

But the second half forecast is actually lower than that. So, from the beginning of the year, would you say that it stays the same or do you think that there was impact of the economy as a whole, so that you might have lowered the expectations?

So, if there is a gap for the differences between now and the beginning of the year, could you explain them?

Well, as for the forecast, in the environments, we are seeing some changes in the area of display. E-commerce, gaming, the membership business, the momentum is not likely to change so much.

So, we do not expect major changes. So, rather in the listing, it’s actually better than our expectation, but the display actually, as a whole, if you look at the overall market, is becoming tougher.

Especially in the first quarter, or the last year, there was a major impact on the display business because of the earthquake. So, there was a upturn from that.

And we need to discount that factor, but seems that that portion is now gone and is now impacted from the economies. So if nothing is done, the display is going to be tougher.

But in the long run, for the 2019, the display, we do not expect the branding to go away. So we believe that there will be a closer relationship with the sales numbers, but we would need to take some initial dips in the branding.

And finally, from September timeframe, we have started to enrich that business. So those measures or the efforts will be continued in the second half.

Thank you. Any other questions?

I’m Koike of Goldman Sachs. I have three questions all together and those questions are related to the previous questions somehow.

In terms of the second quarter, in terms of the advertisement, there should have been a trend as compared to the previous year. So, please tell me about the trend.

And in terms of the guidance that you have provided for Q2, the environment has changed dramatically. So can you tell me what is the trend by each month, starting from July, August, and September?

That’s question number one. And moving to the second question.

Is it okay if I pose you all the questions or shall we go one by one? Okay.

We have listing and display advertisement. Regarding listing advertisement, each month, we did very well.

And in August, we had the Olympics and we have the summer vacation season in Japan. And so, the term was relatively weak.

But we were able to outdo year-on-year. In terms of the display advertisement, we had the Brand Panel and Prime Display, the situation is quite different between the two.

In terms of the Prime Display, each month, we did more than the previous year same month. In terms of the Brand Panel, July was – it is or it was on par with the previous July.

And August-wise, it was slightly lower than the previous August. And September, we were slightly higher than the previous September.

And we encountered Obon, the summer vacation season and also the Olympics this year. Therefore, the trend weakened.

In terms of Brand Panel, what did you say about July?

It was on par with the previous year’s July.

And September was an increase?

Yes, that’s right.

Thank you. Understood.

Then talking about CPC of listening advertising, you have PC and smartphone. Can you tell me the breakdown of CPC in the U.S.?

Google says that it’s about 30%. How about in Japan?

In terms of PC and smartphone, the cost per click is about the same.

Thank you.

Well, if I may add, we believe that quality is of utmost importance. And so, we have the media and we have the advertiser and the quality that is being sought for.

And in terms of the smartphone, people tend to think that the quality is lower than PC, but I believe that quality decides the price and not the devices. And so, the quality of the advertisement is the determining factor of CPC.

And so, we would like to maintain the media and sponsor and the quality that is being sought for. And we always evaluate the media and the sponsor.

And because of that, we were able to maintain a relatively high CPC level.

Now, third question, do you have any intention to go abroad, meaning, having operations in, for example, the U.S. in particular?

Well, you’re talking about the interest? Well, we have a grand vision, so to speak because the Internet started out in the U.S.

But we would like to focus in Japan for now, but we would like to have this grand vision at heart all the time.

Thank you.

Thank you very much. Any other questions?

There is a person sitting at the back.

Thank you for the presentation. Takeda from UBS.

One question. Today, you made – disclosed some information.

You changed the segment and settlement and finance has become very important, so you spun this off. So could you elaborate on that?

As of now, the size – oh, you have already given the size of the business. That is mentioned in the supplementary information.

But for you to grow your businesses, the settlement, what will be the potential of this business on other profit and loss? And also having this business what are the benefits the users of their, who can expect?

So, why do you intend to enhance the settlement and finance business?

That’s a little briefly explained at. Tanida is in-charge.

So, Tanida-san can pitch in. Well, we actually did have this settlement in the finance business, but it was in addition to the e-commerce business.

The positioning was different. But we wanted to make this independent.

And so we’d like to be able to provide this service as a service which can be utilized by other companies. O2O is also emerging.

So, I think there is an opportunity for that. And rather than settlement, I’d like to talk about finance.

Already, we have the full securities and insurance and so forth. And I – we believe that there are some more opportunities there.

As for the settlement, already we have a major catch moving in Yahoo! and using search and map.

There are many people who actually do the shopping. So, we’d like to provide the information and also we’d like to get revenue through the settlement services.

As for the finance, the wallet customer – there are actually 26 million. So, we look at how people use money.

It seems that the saving, for example, is a major part. And we were unable to collect the information on that until now.

So, we’re using the Internet and smartphone. We are thinking about providing the convenient finance services.

So in that sense, we wanted to separate this business, so that we can once again place focus on this. Tanida-san?

Tanida from – the President of the Central Services Company. From the business perspective, distribution, net Internet and finance, there are lot of synergies and there are a lot of successful examples we’d like to catch up.

And I would like to think about what kind of business is possible. So ¥1 trillion to CA, money transaction occurs.

And we worked with the JNB already. So settlement service, we’d like to provide this service to many people.

From the users’ aspect, we have alliance with the T-Point and we would also invest in it in the future. So there are three things, smartphone first, simple, and the system, so that you can accumulate a lot of key points.

So we’d like to provide such finance or financial services, so that the users can accumulate more points.

Thank you. If I may add?

In the settlement and finance services, is there – are there any potential for the mergers and acquisitions? Listening to you now, it seems that this is something new that you’re trying.

In the case of Rakuten, they bought and they acquired finance companies and they provided a credit card and insurance and so forth and I think their business model makes sense. So what do you think?

Well, as for the scheme, yes, that’s something that we are considering right now. And the media, whether we focus on the media or whether we should work more closely with the JNB, utilizing the existing assets.

So that’s something that I’d like to continue to discuss and probably we can make some announcements separately.

Thank you. Any other questions?

I am Tomimatsu of Merrill Lynch. I have four questions.

Firstly, it’s about display. I understand that it is impacted by the economic environment.

And in terms of the revenue for three to six months, I guess it will not be only impacted by the economic environment, but also the advertisers or what is your short-term view of October, November? That’s question number one.

Well, I’ll repeat myself. I’m not that optimistic.

I think the environment is relatively severe. So we have to be challenging and reinforce our sales activities.

And I hope that we will be able to attain good number. In terms of the display advertisement for the next three months or half year, I think this is the time that we have to bare the situation.

Yahoo! would like to provide very impressive advertisement.

So we would like to explain new advisement products to the advertisement agencies. So that on a steady basis, we will be able to demonstrate the impact of having the advertisement on Yahoo!

and that is a challenge for the second half. And I do not think that the environment totally changed from before.

So we will just continue challenging.

Well, I joined this session from the midway. So in terms of listing in your business result number, you mentioned that the interest margin was the record high.

And in terms of the contribution in July, how was the contribution level? Please tell me your quantitative as well as qualitative response.

In terms of IM, we have SS as well along with IM and 14.8% was the increase of the listing advertisement. And IM surpassed that of SS in terms of the increase.

But in terms of absolute number, it is relatively low, but we believe that IM grew in a very robust manner. In terms of the ratio, IM is less than 1% or 10% rather of the listing advertisement.

You mentioned about the impact of the payment to Google in terms of cost of sales. And in terms of July, you actually went beyond a certain threshold, so there was an increase of cost of sales.

And in terms of that number – in terms of the ratio that you have to pay, it will be steady for the next coming month, so there will not be a major impact on cost of sales or in the next quarter or so do you think there is a potential of further increase in the cost of sales because of the increased payment to Google. So can you tell me long-term perspective of how that will fluctuate in the future?

Well, of course, I cannot disclose to you the contractual details. We have a certain threshold.

And once you go beyond that threshold, you have to increase the ratio and that ratio will continue then afterward. And in terms of cost of sales, how much will be contributed by SS will determine the impact on the increase or decrease of cost of sales.

It will not increase by several points, only decimal points.

In terms of the business outlook, you have the ultimate speed increase of operating profit. And I believe that listing is growing very rapidly, but other segment-wise it is behind the forecast.

So in order to increase the growth rate, you have to increase the growth rate of listing or you have to focus on other segments, so that they can increase or you should open up new business. You want to have the growth by two-digit bigger next quarter.

And, realistically speaking, what kind of avenue do you plan to pursue in order to attain that two-digit growth, so that you will ultimately attain the final goal of doubling your operating profit by year 201X?

Well, listing is very strong now and so I guess, naturally speaking, you try to further reinforce your listing. And so we will have more resources allocated to listing advertisement.

On the other hand, we have e-commerce and games and we have settlement business. And those are not the large segment yet.

And also, growth rate wise, some are in the plateau range. So we should not just totally depend on listing, but try to reinforce other segments as well.

So, maybe next year, we will be able to reap the fruit of that effort next year and enjoy two-digit growth. Thank you.

Any other questions? Yes, the person sitting here in the front.

Naya from Ichiyoshi. One question about on the page 68, page view and daily unique browser.

And I’d like to know how I should read this. And monthly page view via the smartphone, if you deduct the second number from the top, there is a major decline.

And, so, feature phone was down and I understand that the PC was strong. Is that correct?

And daily unique, well, concerning DUB same question applies. How do we interpret this?

iPod and Android are not included, I believe. But as of now, how are they doing?

And when do think you will start to disclose this – the contribution from that? Because there is a tethering and probably that might increase this by the iPad.

So, could you talk about that?

About PV and DUB, concerning PV, feature phone is down, but as for the PC it’s slightly down. What was the rest of your question?

And same can be said about DUB?

Yes.

What about iPad and tablets? Current status and also forecast.

Concerning iPad, right now, it’s included in the smartphone. The portion is too small, but it’s gradually increasing.

I think about the timing of the disclosure, I cannot make a commitment. But when it becomes more important, we’d like to consider that.

So it’s included did you say? In the past I think you mentioned it was not included.

Sorry, I said the opposite. It’s not included in the smartphone, but rather it is included in the total.

About the PC page. The great portion is by Auction and Auction is slight down.

And Auction actually – there has been the shift to the smartphone in the area of the Auction earlier than the others. So, as a whole, the Auction becomes more conspicuous in the driving the page view from PC to smartphone.

Any other questions?

I’m (inaudible). Please turn to page 38, I have one question.

It’s about e-commerce. And you have a social graph.

And I think that those two have very high affinities. And on a quarterly basis, e-commerce was not increasing very much.

But in terms of Facebook, if you take a look at page 38, when you go to your top page, you will be able to see Facebook if you are the Facebook user as well. And if you further delve into this, you can use Facebook’s social graph and then further boost your e-commerce.

What do you think about this?

So, if you turn to page 38 – rather would you please take a look at 37? There is a company called Crocos.

And this is the first company in Japan certified as a developer of marketing by Facebook. So it is evaluated very highly and we invested in Crocos Japan.

So, we started EC-oriented Facebook usage via Crocos. And we are coming out with due product.

But in terms of Facebook and Twitter and other social graph, it will increase e-commerce to some extent. But I do not think that it will be a major contributor.

And so in terms of the new customer acquisition channel, it can be one of the ways to capture more customers. I don’t know about the future, but we will try to – try new voters in the domain of social graph and e-commerce and try new projects.

Thank you.

Any other questions? No more questions?

Thank you very much. That concludes this meeting.

Thank you very much indeed for coming today.