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Transcript of Chapter 1. Introduction. Incorporation 1995 April PresidentNam Kyu Park Capital2,671 MW Core...
Chapter 1.
Introduction
Incorporation 1995 April
President Nam Kyu Park
Capital 2,671 MW
CoreConfidence
Digital Audio Technology
Business Area
MP3 PlayerWireless InternetMuitimedia S/W
Employee 105 (R&D 60)
Address Seoul, Koreawww.cowon.com
Affiliate company
JetAudio, Inc. US, CA. IrvineCowon 100% Ownership
Listing date July 11th, 2003
Overview
Overview
Value
Concord Customer Challenge Creativity Confidence Contribution
No.of Shares
5,340,000
par value KRW 500
Stock option
51,000
Capital KRW 2,671M
Overview-Finance
99’ 00’ 01’ 02’ 03’E
Sales 1.4 3.8 8.5 16.8 35.0
After Tax Profit 0.5 1.4 1.8 3.6 6.0
ROE 42% 37% 32% 43% 35%
30
25
20
15
10
5
1.43.8
8.5
16.8
35.0
Every Year 100% Growth rate
0.5 1.41.8
3.6
6.0
42%
37%
32%
43%
FY99 FY00 FY01 FY02
Billion KRW
FY03 E
35%
Over 37% Average ROE
Vision
Core Confidence
“Digital Audio”(iAUDIO.com)Software
(Multimedia)
Hardware(MP3 Player)
WirelessInternet
(Contents)
“ Global Multimedia Total Solution Company ”
3 Business Area Synergy EffectBuild up community for Service, Sales, Advertise in iAUDIO.com
Shareholders
Shareholders’ Ratio
1Month lock-up 18.43%
Others
23.67%
Board of Director 53.63%
1year lock-up 57.90%
23.67%
Lock Up
Bokwang 4.65%
Employees 7.49%
Employees 4.27%
In IPO program
SKT 6.29%
1995.04
1995.05
1996.01
1998.08
1999.05
1999.08
1999.10
2000.08
2001.04
2002.09
Established
Launched voice software ; Jet-talk, jet-voice, voice-wizard
Launched multimedia S/W ; Jet-audio
Established R&D center
MP3 Player
Wireless Internet Business
Funding from Bokwang Venture Capital
Funding from SK Telecom
Established JetAudio, Inc. in US
Launched 3D Avata Chatting Game
Principal History
Chapter 2.
Business parts
• MP3 Player- iAUDIO
• Wireless Internet
• S/W- Jetaudio
• New business- Partyparty
<World/US MP3P Market Estimation>
구 분 2000 2001 2002 2003 2004 2005
World(Volume,Thous.) 2,260 3,500 5,830 8,990 12,110 15,710
World(Amount,USD Mil.)
450 710 1,220 1,930 2,550 3,250
US(Volume,Thous.) 1,810 2,660 4,360 6,610 8,670 10,940
US(Amount,USD Mil.)
360 540 920 1,400 1,790 2,150* Resource: IDC, 2001-
MP3 Player Market Size
Radio Walkman MP3 Player
iAUDIO Small & Multi-function MP3P
MP3 Player-Product
• Function
- MP3 Player : extreme Sound quality
-Voice recoder : 18 hours high quality
voice recoding
- FM radio: 24 channel & recording
• Products (Positioning in high-end market)
- iAUDIO CW250, CW300
- iAUDIO CW400 (Sept.2003, the smallest type)
- iAUDIO CW500 (Nov., Hard Disk type)
- Focus on the high-end market
• Honors
- The World best MP3P by US Amazon.com users
- The World best MP3P by CNet experts
- The Korea best MP3P by PC-line magazine
- The Korea best MP3P by the electric newspaper
MP3 Player- Competitiveness
The proven Worldwide
#1 MP3P By US users & experts
MP3 Player - SWOT
• Superior R&D
• Accumulated S/W R&D
• Brand building
• High royalty customer data base in www.iAUDIO.com
• Set up distribution cannels
• Synergy with S/W, Wireless Internet
* Major competitor : Reincom, Digitalway, Samsung Electric Co., Hyunwon, Mpman.com, Sonicblue
• Produce outsourcing
Solution ; Two partners (Samdo, Mirea)
• Not enough product model
Solution: launch new models (FY03 ; 2 products, FY04: 3~4 products)
• Growing market size
• User infra-system up (P2P, speed-up internet)
• Using for music, language,& business
• China’s low pricing
Solution: High-quality, High-end
Strength
Weakness
Opportunity Threat
MP3 Player- Strategy
• To Build Up Brand Power
- To Intensify Brand Marketing by utilizing domestic infrastructure
• To Diversify Product Portfolio
- To cover wide range of market sectors (including HDD Type market)
- To launch two more models in this year (Oct. and Nov.)
• To increase overseas market
- To launch several products in major markets (Korea, US, China)
- To penetrate new market (Middle East, East Europe)
• To increase production capacity
- To set up Assembly lines in short term
- To produce goods in China in long term when production exceed 50K/Month
• To put products in right position
- To position new products as High-end products continuously
- To cover low/mid-end market with old models with competitive price
MP3 Player-Distribution channel
Traditional market
15%
Chain Store
25%
Major on-line mall
30%
MP3 Specialize
d mall
20%
Event
10%
Traditional Market
Yongsan, Techno Mart
Kugje, Busan & Other cities
ChainStore
Hi-Mart, Junjaland21, eMART, Wall Mart,
Lotte Mart, Home Plus
Major On-line Mall
Samsung Mall, LGeShop, Lotte.com,Interpark, Hmall CJMall, BuynJoy
MP3 Specialized Mall
MPmate, Mpnavi
Total MP3
MP3 Player- Overseas market
- US, Mexico, Canada
- Japan, China, HK,Taipei, Singapore , Australia, Russia
- Germany, Swiss, Austria, UK, Norway, Denmark, Sweden, Fineland
- AFFES(US Army PX: Korea, Japan, Europe) DFS(Incheon, HK)
Country Total 1Q 2Q 3Q(E) 4Q(E)
N. America 29.4 3.4 6.5 8.0 11.5
China/HK 25.3 3.0 4.3 7.8 10.2
Other Asia 12.0 0.4 0.9 4.1 6.6
W. Europe 16.7 0.3 2.6 5.0 8.8
N. Europe 4.3 0.8 1.3 2.2
S. Europe 5.6 2.4 3.2
Arab/E. Europe
2.0 0.5 1.5
AFFES 5.5 0.3 1.7 1.7 1.8
Sub-total Export
100.8 7.4 16.8 30.8 45.8
Domestic 79.0 18.7 12.0 13.5 34.8
Total 179.8 26.1 28.8 44.3 80.6
(Thousand)
* New product launching : CW400-Oct., CW500-Nov.
MP3 Player- FY03 Sales Volume(E)Enlarge & Diversify Overseas market
2001 2002 Growth rate
SKT 2,681 9,457 252%
KTF 751 4,862 547%
LGT 213 1,740 716%
합계 3,645 16,059 340%
(Thousand person)
<CDMA2000-1x Subscriber>
<Wireless internet subscriber & Mobile subscriber>
WI Subscriber (A) Mobile Subscriber(B)
% (A/B)
SKT 14,355 17,105 83.9
KTF 10,387 10,490 99.0
LGT 4,070 4,729 86.1
전체 28,812 32,324 89.1
Resource: Ministry of Information and Communication (2002. Oct)
Resource: Mobilecome, Feb. 2003
Wireless Internet –Market Size
(Thousand person)
Wireless Internet-Sales flowContents Special Ring , Ring-back tone service, June, Game
ContentsContents
Plan
& converse
Service
& Marketing
Copyrighter
Customer
Profit Sharing Structure
45% 45% 10%
* Cowon’s sales revenue : 90%
Wireless Internet
Contents service
• Digital audio contents
Bell sound, ring-back-tone service
live-bell, music on demand
• Digital video contents
Music video, live-screen, VOD
• Game
Casino land, Nemologic, vocabulary-wizard
Wireless Internet-Competition
MobileMobileServerServerSolutionSolutionContents (Multimedia)Contents (Multimedia)
Mobile 용 Server구축 기술
Mobile Solution 및 Application개발 기술
Mobile 용 Contents (Multimedia Contents)
편집 및 제작 기술
Total Mobile Business
• Made an Strategic Alliance with SKT (SKT invested in COWON in August 2000).
•Started business with an inception of wireless Internet in Korea
• Powerful human resources keeping many top-trained engineers
• To maintain information channels for new technology and trend
• To perform reliable after service and adapt new technology and contents
• To have strong partnerships with over 100 music agencies and label companies
• To run multimedia contents Data Base
• To play a role as a leading company in June multimedia service
• To focus on multimedia solution and contents for EV-DO, IMT2000
• Selected the best CP and best partner by SKT
Wireless Internet - SWOT
Main competitor : 5425, Yaho, Danal, Widerdan.com, Feelink
Strength
Weakness
Opportunity Threat• To innovate the internet
technology (Ultra-speed data transfer, grade-up handset with multimedia function, decreasing mobile subscription fee)
• To set up pay-market in digital music
• to move up from WI to mass-media
• WIPI (Wireless Internet Platform for InteroperabilitySolution :To set up and increase our competition than others’- Portals, other CPs
• Strategy partnership with SKT (As a master CP, SKT investment in 6.29%)
• To have taken part in WI contents early stage of SKT
• To take lots of contents (music, video, etc)
• To accumulate know-how of WI business
such as business model, service model
• Lack of own brand in WI Solution : To increase marketing activity –advertisement, promotion, co-marketing with S/W & MP3 Player
• To service for only SKT
Solution : To launch ring-back-tone service for LGT, KTF from July 2003
Wireless Internet-Monthly Sales Amount
0
0.2
0.4
0.6
0.8
1
1.2
1.4Billion KRW
Year 2002 Year 2003
Continuous Sale Growth
Jetaudio - Multimedia S/W Product
• Audio/Video total solution
• Internet broadcasting function
• Able to mp3PRO, OGG, Divx, DVD format
Competitor: Winamp, MediaPlayer
Honors
• 99’ SoftExpo Champion
•, The most popular S/W 20 in Cnet and ZDNet
• 02’ The world-class product of Korea
Marketing Strategy
• To focus on high quality of the product by utilizing accumulated world-class R&D ability
-> To widen market into B2B bundle business (Major reference customers - NEC, Fujitsu, IBM, Gateway)
• To manipulate existing worldwide 10M customer bases -> To enlarge customer base by providing a prompt upgrade and to make online digital audio business by connecting it into JetAudio. “JetAudio is Portal.”
New business - 3D Avata chatting game
Product
• www.partyparty.co.kr
• Chatting & game by 3D Avata
Competition
• Using the first Cartoon 3D
• Using Cowon’s multi-media tech.
Busines Model
• To sale virtual items
• To set up communities
• 60,000 members from April 2003
• To connect with Cowon’s digital audio contents
3D Avata
Game
Dance
Chatting
Music
Community
Chapter 4.
Financial Outlook
Net profit & ROESales
30.0
25.0
20.0
15.0
10.0
5.0
6.0
5.0
4.0
3.0
2.0
1.0
1.43.8
8.5
16.8
35.0
100% YOY
0.5
1.4
1.8
3.6
6.0
42%
37%
32%
43%
99 00
01 02 03E
(KRW, Billion)
99 00
01 02 03E
35%
Average 37% ROE
Financial outlook
(KRW, Billion)
Sales revenue by business part
15.0
10.0
5.0
0.1
99 00 01 02 03(E)
2.52.71.3
1.0
1.80.5
0.6
Wireless Internet
MP3 Player
S/W & Others
4.2
10.0
(4.0)
4.2
12.2
24.0
(8.5)
* ( )
1st Half
0.4
20.0
25.0
30.0
1.43.8
8.5
16.8
35.0
Break-down by business part
FY99 FY00 FY01 FY02
MP3 Player
Sales 1 560 1,780 11,196
Net Profit
55 242 2,053
% 10% 14% 18%
WirelessInternet
Sales 107 459 1,806 4,182
Net Profit
20 108 292 1,129
% 19% 24% 16% 27%
Software Sales 1,301 2,770 2,440 385
Net Profit
448 1,068 1,172 369
% 34% 39% 48% 96%
Other(Xing-Q)
Sales 1 13 2,429 1,048
Net Profit
2 73 30
% 15% 3% 3%
Total Sales 1,410 3,802 8,454 16,811
Net Profit
468 1,233 1,779 3,581
% 33% 32% 21% 21%
- Increasing sales & net profit % in MP3 Player
- Every year twice sales in Wireless internet
(Million, KRW)
R &D
0.15
0.39
0.86
2.84 ( 주1)
1.811% 10% 10%
5%
(KRW, Billion)
99 00
01 02 03E
17%
0.5
2.0
1.0
1.5
2.5
3.0R&D 비용
매출액
Person 1414 1616
3333 4040 5656
R&D
• MP3P R&D Exp/model : 0.25
• 50% Exp of the competitor
• 2 models launched in 2001
• Jet-audio new version in 2002
(1.1 billion won)
주 1) 0.03 won for New business
Chapter 5.
Investment highlight points
• Growth
• Competition
• Profitability
• Stability
• Others
Investment Point 1
Growth
Competition
• CAGR 100% growth in high growing market - MP3 Player, Wireless Internet
• Market growth and M/S increasing
• Worldwide market• The products proven by users and experts
- The world best products - ZDNet, CNet, Amazon -> No.1 in the world
• The well skilled employees in low moving rate
• The synergy in all business parts w/ digital audio
• The flexible company structure
- Quick response to market change
Profitability
• over 37% ROE during 5 years - target 30%
• over 20% Net profit during 5 years
• Almost none of capital expenditure to do more profit
• Increasing interest income from accumulated working capital
Investment Point 2
Stability
Others
• Over 1year lock-up 57.90%
• Market forecasting ability of CEO
• Never borrowing since establishment
• Pull-strategy marketing (small A/R)
• Stable stock share of management and employees (65.39%)
Appendix
• Organization structure
• Affiliate- JetAudio Inc.
• Summary of Financial Statement
• Other products
Organization structure
Stockholders
President
V.President
Wireless Internet Div. (39)
New business div. (15)
MP3 Player Div. (31)
Sales & Marketing-A/S (11)
Finance & Administration : IR (5)
Strategy & PR (2) JetAudio, Inc.
(8)
President Park Namkyu• Seoul National University
• Seoul National University
- MS
• LG Electric Co.
• Establisher of COWON
Vice President M.Y. Lee
• Seoul National University
• Seoul National University- MS
• Samsung Electric Co
Auditor JW Choi
• Seoul National University
• Michigan State Univ.- MBA
•PerreGreen Security Co.
•IMM Venture
Affiliate Company
Outlook
FY02 Financial Outlook (USD, Thousand)
Asset : 1,308Liabil. : 249Cap. : 1,057
Sales : 1,084Net Profit : 268
Name JetAudio, Inc.
Incorporate April 2001
President Jae-Ook Chung
Capital USD 1Million(Cowon 100%)
Business Area
Multimedia S/W R&D, Sales
N. America MP3 Player sales
Employee 8 Person (R&D 5)
Address California, Irvinewww.jetaudio.com
Purpose Open up US market
BOD of JetAudio, Inc.
Chung, Jae-Ook : CEO, President
- Seoul National Univ., BA, Engineering
- Seoul National Univ., Ph.D, Engineering
- An establisher of Cowon
Steve Ryu :CFO
- Seoul National Univ., BA Economics
- Univ. of Southern California, MBA
- Samsung Everland
- Samsung Security Co.
Kang, sangkoo : Sales & Marketing director
- Seoul National Univ., BA, Engineering
- Duke University MBA
- DACOM
- Nortel Networks
Summarized Financial Statements(B/S, P/L)
Current Assets 1,820 3,570 4,403 5,859 7,874
Quick Assets 1,820 3,374 3,679 4,208 6,035
Inventories - 196 724 1,651 1,839
Fixed Assets 225 1,466 3,321 6,122 6,349
항목 1999 2000 2001 2002 2003 1st Half
Total Asset 2,045 5,036 7,724 11,981 14,224Current liabilitie 119 202 1,096 1,634 1,666
Long-term liabilities 40 112 40 103 179
Total liabilities 159 314 1,136 1,737 1,845
Common stock 444 1,522 1,522 2,100 2,100
Capital surplus 956 1,476 1,476 894 894
Retained earnings 486 1,718 3,507 7,089 9,193
Capital adj. - 6 83 161 192
Total equity 1,886 4,722 6,588 10,244 12,379
Lia. & Cap. 2,045 5,036 7,724 11,981 14,224
항목 1999 2000 2001 2002 2003 1st Half
Sales 1,410 3,803 8,455 16,811 12,529
Cost of goods 542 1,994 4,906 10,875 8,236
Gross profits 868 1,808 3,549 5,936 4,293
Sales & Adm.Ex 345 517 1,543 2,769 1,770
Operating income 523 1,291 2,006 3,167 1,094
Non oper income 31 127 121 166 68
Non oper expense 14 1 51 190 56
Ordinary income 541 1,418 2,076 3,144 2,534Extra ordinary income - - - - -
Extra ordinary expense - - - - -EBITA 541 1,418 2,076 3,144 2,534
Taxes 73 185 287 -437 431
Net income 468 1,233 1,789 3,581 2,104
(KRW, Million)
B / S P / L(KRW, Million)
MP3 Player iAUDIO (amazon.com #1)
Thank You