Manabu Miyasaka - CEO Osamu Aranami - President, Marketing Solution Company Takao Ozawa - Head, Shopping Company Toshiki Oya - CFO

Keiichi Yoneshima - Barclays Securities Yosuke Tomimatsu - Merrill Lynch Taro Ishihara - Daiwa Securities Masato Araki - Mitsubishi UFJ Morgan Stanley Securities Co. Ltd Taro Ishihara - Daiwa Securities

Ladies and gentlemen, thank you very much for coming today despite your busy schedule. We'd like to now start the presentation of the first-quarter business results of Yahoo Japan Corporation.

This presentation is shown on the Internet and also on demand at a later date, so please understand this. Let us, first of all, introduce the participants from Yahoo Japan.

From the right we have Mr. Manabu Miyasaka, the CEO of Yahoo Japan Corporation.

Next to him we have CFO, Mr. Toshiki Oya.

The procedure of today's meeting, first of all, Mr. Miyasaka will present and then we take questions.

We plan to end this session at 6.00 pm. So let us start with the presentation.

Thank you very much. Now I would like to present the first-quarter business results for FY 2013.

I'd like to briefly present the results, spending about 20 minutes or so. This is the highlight of the first quarter.

The revenue, operating income, ordinary income and quarterly net income, all of those four numbers, have achieved double digit growth. For your reference, in all of those four numbers we have achieved three consecutive quarter double digit year-on-year growth.

This is the first time after the six years. And we started the new management team a year ago, so we have started this second year with these good results.

Now, the revenue has grown by 19% and this is thanks to the growth of the Promotion Advertising revenue as well as the Premium Membership. And we have newly-consolidated some of the subsidiaries.

And those were the reasons behind this growth, the Group management. Now, the revenue has grown by 19%, but the income has grown by 15.4%.

The profitability of some of the Group companies were superior, so because of that the operating income growth was lower than the growth of the revenue. Turning to the next page, this shows the quarterly revenue trend.

It continues to grow. Next is the growth rate and the trend of the growth rate.

We continue to have a double digit growth. Now quarterly revenue breakdown is shown here.

In the first quarter the revenue was JPY92.3 billion. Compared to a year ago this is the increase of JPY14.7 billion.

The breakdown of this is the Marketing Solution business. This is the Advertising business.

This has grown by about 20%. It's JPY11 billion or so.

Consumer business, this includes the Shopping, Auction, Premium Membership and Games, so this is the direct business with the consumers. This has grown almost by 9%, JPY3 billion or so.

Next the biggest percentage of the revenue is the Advertising, so let me talk about the details of the Advertising-related revenue. In the first quarter we achieved JPY49.4 billion in terms of revenue.

Compared with a year ago, this has grown by 15%, or JPY6.3 billion. Now, the breakdown of this is that Sponsored Search is 13%.

YDN has grown by 117.8%, more than double. As for the Premium, Advertising has grown by minus 2.5%, so it has declined.

Concerning this, I will talk about some details about the Premium Advertising. Next page shows the Mobile Phone-related Advertising.

This continues to grow steadily. As a result of this, the Advertising-related revenue growth is shown here as a quarterly trend.

The Promotion Advertising continues to grow at the high level. And Premium Advertising, as you can see, has fluctuated, has been volatile in terms of the growth rate every quarter.

The following page shows the Promotion Advertising revenue and the change contributors by industry. In all of those we have seen positive growth.

Now, turning to Premium Advertising, some of the industry contributed and some other industries saw the negative growth, so it was a mixed trend. Next is the E-commerce-related Commerce transaction value is shown.

Now, Shopping, Auction and Others, settlement and financial services and so forth, in total was JPY411 billion and, compared to the last year, has grown by about 4%. Now, if you look at the breakdown, Shopping related has declined by 1.4%, Auction related has grown by 4%, so continuing on with the previous quarter we have seen the increase.

We have not yet bottomed out, but in the two consecutive quarters we have increased this Auction-related business and this has been the first time since 2011. Now, so far I talked about the revenue, and this shows the quarterly profits' change.

Now, the operating income growth trend is shown here. This is self-explanatory.

So I talked about the first-quarter results, and this shows the first-half business outlook and we are revising the outlook, which is shown here. Now, as for the second-quarter business outlook, this is for your reference only.

Now, from now on I'd like to talk about each business and give some details, starting with the Marketing Solutions business. Now, this business we would like to create good services so that we can acquire more users.

We'd like to provide surprising services. Surprising services will lead to more users as a media company.

And Takao Ozawa and other people are focusing on this. When we have more users we would like to make sure that we use them for the marketing and advertising.

And (inaudible) is in charge of that. So, this is the cycle of this business.

As for the services, whether we are getting more users or not is something that I'd like to talk about first. We continue with the Yahoo Japan traffic and you see that the top-20 Y1, Y2, we have the ranking of the services.

Y1, Y2, we have top-20 services. So, looking at the health of each business, whether Y1 and Y2 are growing or not, especially with the smartphones or tablets, is a very important factor.

Next page shows that. This is DUBs.

And DUBs, as you can see, is growing steadily. Now, in order to improve the usability we are doing numerous things.

Another good example is shown here. The top page, the design, well, it's not really a renewal, but for the smartphone and smart devices we have done some tuning so it will be easier to see.

It's much simpler than before. As for Yahoo!

Finance, we are making improvements every day. And because of the high stock prices, Yahoo!

Finance has shown the good results in the first quarter. Now, as for Yahoo!

News, we have started the official application. In the app store we have been ranked as number one.

Now, Carview! has launched.

Carview! is now our subsidiary so is now consolidated, and Carview!

with exclamation mark was launched. So it's renewed.

And Yahoo! Auto, if you click on that, you would find this Carview!

with exclamation mark. So, as Japan's automobile service side, this is the largest and the most comprehensive site.

Now, turning to smartphone, what we are doing as measures to improve the usability is something I'd like to talk about. Now, the number of the application download, 95m and up.

We are continuing to grow this. Especially the growth were seen in the community factory.

That is the application which is growing. And community factory actually exceeded the 25m downloads so significant growth.

Now, Kakao Talk is the next one. This is growing steadily.

And globally, this is global number, the users exceeded 100m on July 1, so we are now above 100m in terms of global users. As a new service, there are several number-one ranked services.

One is Yahoo! File Manager.

So again this is ranked as number one in this category. And, besides this, we have Kazoc.

This is for the children-specific recording devices, so this can be shared among the family members. It is a closed-community type of service.

So this is again ranked as number one. And we have this Yahoo!

Medicine Note, so this provides medicine time alerts. So, this again was ranked as number one in app stores.

In GyaO! KIDS this is a function from the parents point of view which allows children to watch videos and so at the iPad AppStore has been ranked as number one.

There are other apps that have been ranked as number one, a number of them, and gradually in terms of apps compared to before; I think we have become better in terms of developing apps. But if we look from the global perspective there's a lot more splendid apps, so in terms of quality of the apps we want to strive to make it really good.

So through these activities we were trying to motivate our customers. But we have to monetize that to be able to conduct our business.

So how we are going to monetize that I would like to try to explain about that. In terms of the Premium Advertising business and YDN I would like to explain about these in more detail.

For Premium Advertisement, in terms of the trend of the sales, I think there is a polarization within this business. In a nutshell, the Premium Advertising overall is minus 2.5%.

Year over year it's down. But in terms of Brand Panel it's not quite favorable, so non-Brand Panel business is not favorable.

So it's the non-Brand Panel Other Premium Advertisement is struggling. I think that is the first quarter.

So Brand Panel sales has actually, year over year, grown by 2%. Especially from January we have been starting to introduce the Rich Advertisement.

It's very popular. So about 30% of the Brand Panel revenue is coming from the Rich Ads.

So with the Rich and Impressive Advertisement, if that is the case, there seems to be strong demand. For instance, this is a certain automobile manufacturer, an advertisement using the top page.

So these types of more creative, more impression advertisement that actually leaves you an impression, by doing so, we'll be able to improve our figures. On the other hand, with Other Premium Advertising, it's a kind of a soft first quarter.

This will be Prime Display. That will be one of the typical type products.

So we think we still can grow this category, but for this quarter this business was not favorable. And, as a result, if we just add Brand Panel and the Prime Display year over year we saw a decline in this category.

But it's not the case that we're just going to stand and do nothing. So the Prime Display, of course, we do want to improve the business and on a daily basis we will try to improve the business.

But a part of the Prime Display we're going to reallocate that to YDN, which is doing very well. We have started to take this initiative.

So from July we have started that. Well, actually, it says July here, but it's actually from August.

Right now we're running this on a test basis and we're trying to analyze the performance. Or maybe there will be some cannibalization.

We're trying to analyze this. So, in terms of using YDN, so maybe in some cases we're going to allocate the spaces.

Where the sell-through has not been conducted we'll be able to utilize the inventory. So I think the concern is that the unit price is going to go down.

Maybe the Prime Display's unit price is going down. I think that will be a concern.

So the Prime Display sell-through it's not the case that we're to going to open all the space to YDN, but this will be controlling that. As a unit price we're striving to maintain the unit price, so it's not fully reallocating, so the YDN will be conducted in a more controlled basis from our point of view.

So, the YDN sales, as well as the previous quarter, has been very well. It was 2.7 times' growth compared to the previous year.

So let's go to the Paid Search Advertising. For Sponsored Search you can see that it is growing, 13% growth year over year.

So 13%, because we do some fine-tuning on a daily basis, plus for new initiatives, this is the Prime Search Display. This is the Premium Search Display that we have just started.

So on this display advertising it will be appearing on the search result pages. So this was about our Advertising business and the major initiatives that we took for this quarter.

Now going to the Consumer business. So, the Consumer business within the whole Yahoo!

business, so the total sales was JPY342.9 billion for the last fiscal year, out of which about 30% is the Consumer business. So, for us, this is the very important business as well as for Advertisement, so we want to grow this type of business furthermore.

This year we're going to focus on our Consumer company and we have been talking about that in the last year's financial results announcement. And actually, we have been preparing to be able to prepare for that initiative.

From April 1 we have changed the structure, so we split the Consumer company into two, to the Yahoo! Shopping LAHACO, and that's the Shopping company that is just e-commerce, and we have the auction of premium membership that is the Yahoo!

LOHACO company. So the one person was looking at the Yahoo!

Auction, LOHACO. We have a shopping premium membership.

He has been looking over it all the company. But now we have divided into two so that one person will be focused on Shopping, one person will be focused on Auctions.

So, as of April 1, we have changed the company structure as such. First, let's talk about the Shopping.

Well, what's happened to the Shopping business after April 1? So in terms of the Shopping-related transactions, so year over year (inaudible) so it's minus 1.4% year over year.

Last year and continuing from last year we have been trying to reduce the costs, reduce the SNP campaigns. We have been controlling that.

So we have been taking initiatives to make this business a lean, structured one. So we have been able to go through that to some extent.

We're going to be on the offensive. As of April 1 the Shopping company, they will be focusing not in operating profit, but they should be focusing on the transactions.

That will be the first focus; increasing the transaction value. And I want to be on the offensive for the Shopping business.

So April onwards there are some areas that have been successful. On a long-term perspective I think we do have a product lineup.

We need a lot of product or else we'll be able to attract people and if you don't have people you won't be able to sell. So how are we going to enhance our product lineup?

It means that we have to collect a lot of merchants who are willing to sell. So the new merchants, we're trying to expand the number of stores for the past six months.

As you can see, gradually the number of new stores has been gradually increasing. And we haven't seen this kind of increase for a long period of time.

I think we have just started to see this increase. I think we have started to see some bright signs here.

Now this is the LOHACO business. So this we started in October last year and up until May JPY2 billion was our target.

We have been able to exceed our target. So this year this is going into the second year.

This year's target is JPY10 billion. We want to increase the transaction value by five-fold.

To be able to reach JPY10 billion, the things that we're going to do, there are three initiatives. One, customer acquisition; enhance the product line; and enhance our distribution.

These are the three initiatives or measures that we're going to take. And number one, this is the customer acquisition.

This is the past trend of the LOHACO customer acquisition. This is a graph that shows the timeline.

So when there is a big event you can see that there's a peak and then we'll be able to attract a lot of customers. So what is very important is that even though if we are able to acquire a lot of customers, we will have to continue this activity unless the people repeat.

In LOHACO we have a lot of repeat buyers. About 20% of the buyers on the following month will be repeat the purchasing.

So we will be able to capture the customers and actually lock-in these customers. And in terms of the customers, I think we have been able to see good signs.

And number two is that we want to enhance the number of products. So we want to have a more enhanced product lineup.

We have 30,000 SKU. We want to increase this to 70,000 SKUs.

So from August we would try to achieve 50,000 unit and especially the basic items such as water, detergent and toilet papers, in addition to them, the pharmaceuticals, pet goods and kitchen goods. Those are the items that we'd like to add to.

The third effort is that we have the new warehouse. This is the Askul Logi Park, Greater Tokyo.

With this new warehouse, the huge amount of product now we are increasing the number of SKU and we had a shortage of the space. And we now have a new warehouse so we would like to utilize this fully.

And as for the fulfillment, Yahoo! Shopping for the stores, we have some examples.

This is Yahoo! Logistics which started and this is what we are doing.

So that concludes the Shopping. Next is Yafuoku!

Auction. The total transaction value is 173.3%.

That is the increase of JPY6.5 billion, or 4% year on year. And last year for a long time we thought that maybe Auction has peaked out, but year-on-year positive growth was seen in two consecutive quarters.

So after five quarters we achieved two consecutive quarter year-on-year growth. But still it doesn't mean that we have fully recovered, so well, we need to say that we continue to have positive growth continuing on from the previous quarter.

So why did we make an improvement? Here this has become a large business, so it's not going to be a minor effort.

So we need to continuously make efforts to make improvements. There are several improvements.

Smart application was renewed and we are trying to improve the search results. And we are trying to reduce the number of the overlapping products.

So these type of steady efforts have led to the positive growth. And, of course, promotion is something that we are conducting.

This is the example of the Yafuoku! Japan Dome Softbank home stadium.

And this is now named Yafuoku! Dome.

And here we have a real stall. We use a place that people can bring their goods to.

So this Yafuoku! Dome well, 1m people visit this Yafuoku!

Dome, so we wanted to introduce them to the reuse of products so that they would participate in the Yafuoku! Auction.

So we are trying to expand the market itself and, as a leading company, this is something that we are doing. Now, next is the Premium Membership.

Softbank Mobile is working with us and there is a new channel. With Softbank Mobile Corporation we are starting to see the high increase of the Premium Member IDs.

Now that's all about the Consumer business. Next is Settlement and Finance and Other businesses.

Basic information is that the number of the active user IDs. There will be hundreds of millions of registered users, but the active user is currently 27m.

And Yahoo! Wallet Accounts, including the settlement information, there are 24.6m accounts.

So based on those numbers, what kind of settlement, what kind of point business can we do is the question. So what we have been doing, this is not the first quarter, but the major effort is the integration with T Point.

So online and offline market can be integrated. We would like to be Japan's largest point service.

It has been separate the on online and offline, but we would like to start to integrate this from April. So we just started.

And the most important thing at the beginning is that those people who have T Point that is 44.5m T members and 27m online members need to get, or combine, or link their online IDs with the offline memberships. So, it's been one month since the beginning and we are in line with our target and I think we have made a good start in terms of this integration between online and offline.

So, we have done many things and we will continue to be only one strong service. And if we are not the only one we would work with others.

So the most powerful tag team is what we are promoting. We are working with the non-Internet related companies.

And as for the unexplored frontier, we are going to do something new. And those are the list of the strategies and progress.

Next, in the first quarter I need to report to you something that is the illegal access. I must mention this.

In May there was an illegal access and 22m IDs were leaked at the maximum. And 1.5m out of that might have accompanied the irreversibly-coded password.

Of course, with only this you cannot log in, but it is possible to come into the Yahoo! network.

And it is possible that we experience this cyber terrorism or attack. So this might have convenienced many users, so on behalf of our Company we would like to apologize for that.

And we are going to do our best to prevent the recurrence of this illegal access. So, as a countermeasure to prevent such recurrence, we are trying to increase the security.

If I go into too much detail I would be revealing what we have done, so I cannot go into the details, unfortunately, about the security enhancement. But we are doing as much as we can to prevent the recurrence of the attack.

So that concludes the first-quarter business results and our efforts in the first quarter.

Yahoo! Japan have pursued types of Promotion Advertisement to the consumers who are searching products and services on the Internet to actual purchasing activities.

Is a sponsored search in Yahoo! displayed at network YDN?

Sponsored search is a click-based text ad which displays as related to the keyword that the consumers have searched and search result pages of not only Yahoo! Japan, but partner sites as well.

As this ad allows effectively approach Internet users who have high purchase advertised in the first place a wide range of sponsors, big and small, are using this as a sales promotional tool. Sponsors who want to list their ads will bid for keywords relating to their products and services.

The bidding price can be set freely by the sponsors. The order of the ads that will be displayed will be determined by the bidding price and the click rate.

No charges are necessary for showing the ad itself. Once the user click on the ad charges will be imposed.

We have been continuously strengthening the ad system functionality of Sponsored Search. To further enhance the efficacy of ads we introduced a new function called Unified Campaign.

With the assimilation of smartphones and tablet PCs, users are more and more searching on a multi-device platform. Through Yahoo!

Japan's Unified Campaign sponsors can optimize their ads depending on what device and time users are on the Internet. In the conventional system complicated management procedures were necessary as you had to set the keywords, ads and bidding prices by device.

But with Unified Campaign the sponsors need to do this only once and they will be able to distribute ads to PCs, smartphones and tablet PCs. PCs and tablets have a unified bidding price setting and, based on this, sponsors can adjust the bidding price for smartphones.

Sponsors will consider the products and services that they want to promote and the purchase rate after click. Based on these analyses they can reduce the bidding price by 100% from the PC price for smartphones, meaning ads will not be shown on smartphones, or they can choose between reducing the price down by 90% to increasing it up 200%.

Sponsors can set a smartphone as a priority device, which allows them to show ads specifically prepared for smartphones, which is differentiated from those for PCs and tablets. Even if the same user are using the keyword, depending on what device and time they have searched, their objectives will differ.

This means that ads should be different as well. Sponsors will prepare multiple types of text so that they can show the optimal one depending on the situation.

By distributing ads by device and by the objective of the users, higher click rates and conversion rates can be expected. Yahoo!

Japan will further enhance the convenience and add functions to enhance the effectiveness of Sponsored Search and strive to grow the sales of this service. Yahoo!

Display Ad Network, YDN, is an ad service which lists ads on content pages, not the search result page. Yahoo!

Japan lists ads not only on our own contents pages, but on major partners' sites as well. YDN is a service that shows ads that users may be interested in.

By utilizing our superior reach to all types of devices and big data, and through precise matching targeting functions this service allows sponsors to reach users more effectively. The function we offer is interest matching.

By analyzing the user's history of search keywords, contents page view, behavior on contents pages, ads will be distributed. The second function is attribute targeting.

Ads can be distributed depending on the age group, gender and the region of the user. The third function is site retargeting.

This is to re-approach users who have visited a certain website. Ads can be shown to these users about these websites.

YDN can show not only text-based ads, but images as well and videos as well, allowing sponsors to offer richer ads by utilizing photos and images. Actual listing of ads will be conducted using this administrative tool.

Yahoo! Japan offers easy-to-use ad management tools so that sponsors can create and manage ads with ease.

Yahoo! Japan offers personalized retargeting ads with our partner, Criteo.

The difference from general retargeting ads is that this service will analyze the user's viewing history by product and distribute the optimal image ads for that user. This is a retargeting ad with a highly-precise matching capability.

It also has a recommend function which randomly displays recommended products based on the products that the user has actually viewed. This will lead to stimulate new demand.

By utilizing our enormous user base and huge traffic, Yahoo! Japan's YDN, which matches the needs of the users and sponsors, is expected to generate more and more revenue.

We think that we have a new opportunity to expand revenue through Promotion Advertisement, centering on Sponsored Search and YDN against a backdrop of the era of multi-device Internet. Yahoo!

Japan will strive to advance further by answering to the needs of the Internet users, sponsors and partners and solve various issues through IT.

Thank you very much for your attention. Now we'd like to take questions.

If you have any questions please raise your hand and wait for the microphone. Please give us your name and affiliation before asking your questions.

If you have multiple questions we would like a question one at a time. Any questions?

Yoneshima from Barclays Securities. Thank you for the presentation.

I have multiple questions, so I'd like to do it one at a time. First question, as for the first-half forecast or prospect, first quarter and second quarter, if you compare the revenue is up but the income is down.

In the previous meeting you mentioned that the first-half prospect is conservative. It might be the case this time.

So when the revenue is higher the revenue is coming up, but cost is also increasing and because of the profit is lower. So could you explain the background?

Do you have any analysis of these reasons?

As for the revenue, the major reason behind this is that it's same as the first quarter; the consolidated new subsidiaries have increased. And up to second quarter the number of the Premium Membership, because of the higher membership fee, this would push up our revenue.

Advertising has been very strong and because of those two reasons I've mentioned are going to push up our revenue.

From the first quarter to second quarter you expect the Advertising to grow?

You mean Q on Q?

Yes.

Because of the seasonality that we have there would be a slight increase. At the same time, as for the expenses or the cost, the sales promotion and the investment in businesses need to be made.

So the first half same as the prospect in April we expect that higher cost or expenditures. Sorry, if I may add, in comparison to the first quarter cost needs to increase by JPY2 billion.

So you mean that the cost of the subsidiaries are going to be higher, or E-commerce, or T Point introduction? Because of those, are you considering increased expenses because of the promotions?

Well, as for the subsidiaries, some subsidiaries we will be investing so that's one part. But, as you pointed out, especially in relation to commerce, transaction value is going to be increased.

So in order to realize that, we will be very aggressive, so that is included in our forecast.

Thank you. The second question is about the Advertising revenue.

Well, except for the Brand Panel it was not good. YDN is going to be increased so that you can increase the sell-through rate.

As for the sell-through rate, what would be the decline of the sell-through rate? Could you talk about that?

And also, the unit price, I'm concerned about the unit price. With the YDN introduction, it might be difficult for you to explain how this would increase the Premium Advertising unit price.

How the YDN would impact on that? Do you have any expected calculation or numbers?

Maybe Aranami can answer to your question directly.

Yes, Aranami from Marketing Solution Company. Concerning your question, first of all, sell-through rate, what is the trend of the sell-through rate?

We cannot disclose that number, but it's not declining quickly. There is a long gradual declining trend.

As for the unit price, in fact, in June we conducted various tests and at the back of the Prime Display, we distributed YDN and we tried to see how that would impact. And also unit price of the YDN was also measured.

And YDN unit price was better than expected. So after August, on the back of the Prime Display, we would distribute more YDN.

And because of that the unit price of the Prime Display is not going to decline. And even if that happens, YDN can offset that.

That is our assumption.

As an image, how much increase do you expect in terms of revenue? When do you think this was successful?

It's difficult to say. The impact is not so small, but I cannot respond in terms of the numbers in value.

I'm sorry.

Sorry to be asking a very specific question.

As a business perspective, Brand Panel and Prime Display and Other Display and YDN are kind of combined and that is how the business is run. So I think that we should look at the growth like that, Premium and YDN becoming one display.

And the last question from me is that in Consumer business, the Auction business, year over year it has increased by 4%. So the Premium ID of the Premium Membership has increased substantially this 4% growth.

From my point of view maybe I was expecting more than 4%. Actually, the membership is increasing but, actually, the growth was at 4%.

It's increasing, but maybe the number of people who are actually participating in auctions is not increasing, or maybe the unit price of the auctions is going down. Can I have a more detailed analysis what's happening in the Auction business?

Yes. So if we look at it by channel, the members coming from Softbank, so it is not necessarily the case that these members are directly connected to the increase of the Auction business.

So the users of mobile -- well, this I'm going off track, but we would like to enhance, for instance, the type of specific things that we can offer to the mobile users so that we can induce them to conduct auctions.

The 4% increase, is it an increase of the number of memberships, or is it the increase of the unit price? So I would like to know the actual content or the items within the formula.

Well, it's both actually, well, this is my gut feeling. I feel that maybe the unit price is going up slightly.

I'm Tomimatsu from Merrill Lynch. I will have three questions.

Number one is that the smartphone JPY8 billion, 4Q is JPY8.5 billion, so, Q on Q a JPY0.5 billion decline. I think the fourth quarter some people who will not be able to use the Brand Panel they went to the smartphone panel, so that was a one-time, one-off increase for the smartphone.

Maybe this fell off. Maybe that was the big impact this from JPY8.5 billion going down to JPY8 billion.

The reason of this decline, I do want to know the analysis behind this as much as possible.

So in terms of the seasonality of the advertisement from 4Q to 1Q, and regardless of the device, I think there is a declining trend in any case in terms of seasonality. Premium Ad for smartphones is exactly as you pointed out.

The 4Q of last year we have been able to sell to a certain extent, but I think things have gone back to normal. The first quarter on a quarter basis it has gone down.

So I want to ask further, so because query has increased, so in terms of the search coming from smartphones will then not being impacted by the seasonality even for the smartphone search. Is it impacted by the seasonality?

So, as Mr. Oya has pointed out, the one is a seasonal factor.

One is the page search. The smartphone user interface we changed that slightly, meaning rather than enhancing the Advertisement revenue it's more focusing on the user-friendliness.

So as a one-off factor the growth has -- well, actually, we intentionally slowed the growth through these measures.

Understood. Second question about the Unified Campaign in the video.

And I think that you have been very careful in promoting this, but the impact of -- any impact more recently this might confuse the advertisers. July, September this might have some negative impact.

Could you talk about your thoughts on those?

Well, for the time being we are doing the transition smoothly. Especially, advertisers are not getting confused.

So July, September timeframe I don't think there will be any negative impact.

What about a positive impact? There will be no positive impact either?

Well, the short-term increase of the revenue is not something that we expect.

Last question. The YDN is growing very rapidly.

The private information protection is another question. For the advertisers and the users I think it's beneficial.

But the other day (inaudible) information there was a leakage, not the private information, but the media jumped on it and they talked about how you information utilized. So logically speaking, well, by the media or the government they might consider this to be a problem.

And I think there are more and more possibility of having that. So how do you intend to overcome such risk or concerns?

Well, we often talk about big data and Yahoo! Japan has various data.

We have various information accumulated; search information; e-commerce information; map information; and wide-ranging, unique information. I think in that sense we have a very unique range of information.

And because of that when we have any leakage that would have a major impact. Our basic way of thinking is that the data is something that are entrusted from the users or consumers to us because they trust us.

So when we use it we have to be very prudent and careful. It shouldn't be used for ourselves.

It has to be beneficial for the users and the consumers. If they say that they don't want the information to be used, we shouldn't use it.

But, at the same time, by using information for the business we have to have a social consensus and there is a gap between that and what the Company wants to do and that would lead to a kind of tension. So, as one of the leading companies, we have to continue to communicate with the society.

The big data, we are trying to utilize big data and we use a report and, for example, the recent election and forecast. Big data is not equal to business.

Big data or data is something that would improve the society. We have to continue to appeal that as a leading company otherwise it would be difficult to get the consensus from people.

So, we would like to continue to do so.

Ishihara from Daiwa Securities. Thank you very much for your presentation.

I have three questions, so I will go one by one. First of all, it's about YDN.

So compared to the previous quarter I saw it growing strongly. So 1Q it's grown by 20%.

So this momentum, if we look at it on the annual basis for this year, will this continue? If that is the case, the background of this, for instance, is it the space or the through rate?

Maybe the unit price is going to go up. Would you like to elaborate more on the background of this growth?

Well, then, for YDN, so year over year maybe double, bringing the business for a year I think maybe this momentum we'll be able to maintain, so in all of the devices. For PC, for instance, I think there's still a lot of room for us to enhance our business.

So, with the inventory we hold in the PC in the smartphones, for instance, there's a lot of inventory still. So in terms of the space I think there's a lot more growth potential.

In terms of the unit price, so there's video image targeting is what we introduced. And the ratio of this is increasing, meaning that the unit price is going up.

So the volume and the unit price going up, so for the time being I think we'll be able to maintain the current momentum that we're seeing.

Thank you. The second question I have is that at the previous meeting you have said that the impact of the tablet PCs, with the dissemination of that, for instance, your access numbers, or in terms of the contribution to your earnings, again, what type of proportion is tablet PCs for your revenue?

I would like to hear your analysis on that. For instance, unit price is going to go up because of this?

Are they any impact that you are foreseeing from tablet PCs?

So in terms of number of search and the request for YDN, we don't have that much of a number. But, year over year it's maybe increased by two-point something fold.

So it is true that it's growing strongly. In terms of the contribution to our earnings, this is still very limited.

In terms of the unit price, I think we still haven't seen any established trend up to this point, so maybe it's just between smartphones and PCs. I think that's basically the direction that we're seeing.

Well, in terms of the tablet device, so we're talking that if we have good service then we are able to attract the customers and then optimal advertising will be distributed and the clients and users will be satisfied. In terms of tablet devices so, basically, the first step is offer good services so that the people or users using tablets want to use Yahoo!

So it's not the case that we have a specific monetized project for the tablets. For the media companies, a theme for this year will be to establish good services for tablets, because this year we've seen a lot of dissemination in tablets.

So the past year there's a lot of momentum in the smartphone device the people use Yahoo!. This year I think the initiative is to try turning these people to use Yahoo!'

s service on the tablet PC as well.

Last question. Looking at the balance sheet, the cash and deposit is still at the high level.

Right the ideal level of the cash, or how you would use it and prioritization of usage of the cash and deposit, could you talk about that?

Yes. Well, the policy continues to be the same, especially after FY '14 and onwards in order to accelerate our growth.

To which area do we plan to invest? It is very clear in our mind that the head of the companies always try to think about the level of the investments.

At the same time, JPY400 billion cash position from the shareholders' perspective, this is very important money that we have entrusted by the shareholders. How to return this to the shareholders is also something that we have to keep in our mind.

So, in terms of prioritization, we will try to continue to make investments for future growth.

Araki from Mitsubishi. The person in charge of Advertising is here.

My question is about Media Mind and making it open. Do you plan to make it open or not?

And third-party distribution, I think that some of the advertisers are waiting for this, for example, consuming the Premium Display space. What are your thoughts on that?

Also, another point concerning the Premium Display. It's not so attractive and the sell-through rate is coming down.

Whether you can make an improvement and make it more popular, or maybe it's time to stop this. So maybe you should focus on the YDN for smartphones rather than this.

After the second quarter, in August and onwards, do you think you can recover? Or do you think this is the last step and it might be difficult to recover this?

First of all, about the third-party distribution, whether we are increasing it or not, for the time being we do not plan to make this open, so it will be only limited. The second question about the Prime Display.

Depending on some advertisers for a certain timeframe they would like to have a guarantee for a certain impression, so that type of advertising is something that they seek. So that market continues to exist I think.

Any reason behind this limited-time service?

Well, advertisers through the third-party distribution there are things that they want to do and Yahoo! Japan can make a proposal and offer that kind of service to the advertisers.

Maybe we can take this offline.

So then from my side I would like to introduce Mr. Ozawa.

From July, I am in charge of Yahoo! Shopping.

I'm the Executive Officer, Ozawa. And Mr.

Miyasaka has said, we have divided Shopping and the Auction business, so I will be in charge of the Shopping business. Unfortunately, I have not been able to contribute to the business of the Shopping business, so I hope that I'll be able to improve the business so that we can increase the transaction value and transaction volume.

Thank you.

So with this, I would like to declare the end of this meeting. Thank you very much for attention.