For Subscribers

Get the complete article now!

TWST: Can we start with an introduction to Kontron (DE:523990)?

Mr. Niederhauser: Kontron is a manufacturer of embedded computers. Embedded computers are, as the word suggests, not visible to the people, but it is intelligent computer based units, based in hard and software, which control machines, cars, processors, data control centers -- anything which needs intelligence.

TWST: What end-markets are you selling into?

Mr. Niederhauser: We are quite diversified. We are strong in transportation; we are strong in automation; telecom is one of our major areas; military is an important area for us; the gaming industry is a very strong area. Each of these areas represent between 8% and 15 % of our revenues.

TWST: Can you comment on the current condition of your markets and provide a picture of how the difficult overall economic picture has impacted these vertical industries and therefore your business?

Mr. Niederhauser: Unfortunately, as you said, most of the vertical industries are experience difficulties. Currently, we are seeing some upside and good business in gaming and military; however, telecom has stabilized at a very low level and automotive is in the process of going down. So, I would say the whole industry is in a stable process, but we are suffering mainly due to delays on investment decisions. The embedded computer space is an emerging market that is supposed to grow at something like 20% plus per year. But these days, investments are delayed.

TWST: So, do you sense the demand and need and therefore the drivers behind that projected growth rate are still in place and it is just a matter of waiting for cap ex spend to come back again?

Mr. Niederhauser: Right. It just needs someone to push the button.

TWST: What are those drivers?

Mr. Niederhauser: One of the major drivers is outsourcing. On the world wide embedded computer market, more than 80% of the markets are manufacturers who design their own embedded computers; like the Siemens, for example who control trains with their electronics. But for them to become more competitive, they want to outsource their side competencies, and that is our chance. So, currently more than 80% is a make and not buy market, but this is going to decrease.

TWST: What are the main objectives and milestones on your agenda for the next year or two?

Mr. Niederhauser: We do not think this year will be a very strong growth year. We think revenue will still be flat before the industry starts to recover towards the end of the year. Nevertheless, Kontron will heavily increase the profit ratios. We believe we will slightly grow in revenues and strongly grow in profits. More strategically, for this year we determined to go for emerging markets; the growth that we don’t have in Europe and North America this year, we want to get in China, and Russia, and in East European countries.

TWST: Would you say you have a strong position already in those emerging markets or is there some major investment required?

Mr. Niederhauser: We have joint ventures in place. We are in Shanghai; we are in Beijing, and another 12 cities in China. We are in five cities in Russia. So we are the biggest player in those countries.