Japan’s NTT DoCoMo Not Performing so Well

October 28, 2006 – 5:50 pm

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Japan’s largest mobile phone service company, NTT DoCoMo, posted a report about their financial condition, which reveals that the net profit of the company has lessened by 17% in the recent quarter. In the July-September quarter, the companies profit came down to 146.3 billion yen. Last year, the profit of the July-September period was 177.4 billion yen. Company officials mainly blamed the poor sales of mobile phone set and price increase in material, personnel. The increase in capital investment is also another major cause that put a cap on the profit margin. The report published in Canadian Business Online says:

Net income fell to 146.3 billion yen ($1.23 billion) in the July-September period, the company’s fiscal second quarter, compared to 177.4 billion yen a year earlier, the Tokyo-based company said.

Sales were eroded by sluggish handset revenue, falling 1.8 percent to 1.16 trillion yen ($9.77 billion). Operating profit fell 9.8 percent to 244.2 billion ($2.06 billion), hit by increased personnel and material costs and a jump in capital investment in third generation, or 3G, phone services.

But the carrier promised aggressive cost cuts to leave its profit outlook for the fiscal year ending March 2007 unchanged at 488 billion yen ($4.11 billion).

NTT DoCoMo is a subsidiary of Nippon Telegraph and Telephone. NTT is the largest telephone company whose major share holder is Japan Government. NTT provides telecommunication facility to all over Japan. Previously state owned, NTT was privatized for better performance. The actual meaning of the word “DoCoMo” in Japanese is “Every Where”. It also stands for Do Communication over the Mobile Network. It was separated from NTT in 1992. Earlier, it was named NTT Mobile Communications Network, which was changed in April 2000 and named NTT DoCoMo, Incorporation. The company is listed on the Tokyo (9437), London (NDCM), and New York (DCM) stock exchanges.

DoCoMo is the leading mobile service company in Japan and covers the entire country. DoCoMo is famous for services like phone, video phone, i-mode (internet), and mail (i-mode mail, Short Mail, and SMS) services. I-mode is the most popular second generation mobile internet service. DoCoMo provides this service to more than 50million subscribers. The company is also the first one to launch its 3^rd generation mobile service in 2001.

Over the years, the company has expanded its business in Europe and North America. Hopefully, the future will be better than now for this company.

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