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Sony Corp. (NYSE:SNE)

Q3 2009 Earnings Call

October 30, 2009 09:30 a.m. ET

Executives

Sam Levenson - SVP of IR

Nobuyuki Oneda - Executive Deputy President and CFO Sony Corporation

Robert Wiesenthal - Group Executive, Corporate Development and M&A, Sony and EVP and CFO, Sony Corporation of America

Gen Tsuchikawa - Senior General Manager, Investor Relations Division

Analysts

Kota Ezawa - Citigroup

Evan Wilson - Pacific Crest

Daniel Ernst - Hudson Square Research

Yuji Fujimori - Barclays Capital

Mark Harding - Maxim Group

Jed Latkin - ING

David Leibowitz - Horizon Asset Management

Presentation

Operator

Good day ladies and gentlemen and welcome to Sony Corporation's fiscal year 2009 second quarter earnings announcement. My name is Lacy and I'll be your coordinator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the presentation over to your host for today's call Mr. Sam Levenson, Senior Vice President of Investor Relations at Sony Corporation of America. Please proceed.

Sam Levenson

Thank you very much for the introduction Lacy. Thank you all for joining us today October 30, 2009 for the discussion of Sony's second quarter results. I am Sam Levenson, Senior Vice President of Investor Relations at Sony Corporation of America and with me here on the conference call tonight, is Nobuyuki Oneda, Executive Deputy President and CFO Sony Corporation, Robert Wiesenthal, Group Executive, Corporate Development and M&A for Sony and EVP and CFO Sony Corporation of America and Gen Tsuchikawa, Senior General Manager of the Investor Relations Division. Thank you all very much for joining us. In just a few moments, we will review today's announcement, then we'll be available to answer your questions.

Please be aware that statements made during the following remarks in Q&A session with respect to Sony's current plan, estimates, strategies, press release and other statements that are not historical facts are forward-looking statements about the future performance of Sony.

These statements are based on management's assumptions in light of the information currently available to it and therefore, you should not place undue reliance on them. Sony cautions you that a number of important factors could cause actual results to differ materially from those discussed in the forward-looking statements. For additional information, as to risks and uncertainties, as well as other factors that could cause actual results to differ, please refer to today's press release which can be accesses by visiting www.sony.net/ir.

With that, I'm going to turn to today's announcements. I'll begin by briefly summarizing the financial results and other key developments during the past quarter. We will also touch upon the key questions raised earlier today, when we hosted our regular earnings press conference and investor meeting here in Tokyo. Let me remind you that a web cast replay of the investor meeting along with the slides presented at that meeting, as well as our detailed earnings release are available on our website for your access.

During the second quarter end of September 30, we achieved a number of successes despite the ongoing challenges presented by difficult economic environment and the appreciation of the yen. Excluding restructuring charges and equity in affiliates, our operating profit for the quarter was 12.5 billion yen as compared with 10.8 billion yen in the second quarter last year. This was achieved despite the fact, that the appreciation of the yen had a 77 billion yen impact on our operating results in the current year period.

Due to the better than forecasted results and after the review of our outlooks for the balance of the fiscal year, we have upwardly revised our full year outlook for operating loss from a 110 billion yen to 60 billion yen. This 60 billion yen improvement is comprised of 30 billion yen in the Consumer Products and Devices segment net of a 10 billion yen increase in restructuring charges, 15 billion yen in the Financial Services segment, 15 billion yen from other factors including a revision of R&D, improved efficiencies at headquarters and other expense reductions and a 10 billion yen increase in our estimate for losses from equity affiliates including Sony Ericsson.

During the quarter we also made significant progress in substantially reducing inventories in CPD, NPS and B2B and Disc Manufacturing to 60 days on hand from 78 days on hand just six months ago, as well as tightly managing receivables and payables. As a result, our cash flow has substantially improved. While the forecast still anticipates negative cash flow for the year, we continue to strive to bring it to breakeven.

The structural transformation process that we initiated earlier this year is progressing in line with our expectations. We now have targeted 330 billion yen in annual cost savings from the structural transformation, reduced advertising and promotional expenses and the reduction in general expenses. Thus far, we have achieved approximately 80% of the targeted 330 billion yen in savings. Among other activities, we continue to consolidate manufacturing facilities and expect to end the fiscal year with 48 facilities as compared with 57 as of the end of last February. In May 2010, we'll close another facility bringing the number of locations down to 47.

On the procurement side, we continue to target the 50% reduction in the number of suppliers. We are also targeting 20% reduction in procurement cost and at this point in time, we're on track to achieve approximately 90% as a procurement cost reduction. So to put it simply, we are radically transforming the processes, the structure, the cash flow and the earnings of the company.

Before we turn to your questions let me briefly discuss the few key developments in each of our businesses. In the Consumer Products and Devices Segment, our results for the quarter were significantly impacted by lower sales, depreciation of the yen and in some cases, lower selling prices. However, due to aggressive cost reductions, operating income excluding restructuring charges and the impact of exchange rates increased year over year.

In compact digital cameras, operating profit increased year-on-year and we achieved an operating profit margin and exceeded that at the same quarter of the previous year. In video cameras, we achieved the same operating profit margin as last year, because of aggressive expense reduction, despite lower sales and profits.

In the TV business, our operating profit excluding restructuring charges declined by 3 billion yen to 11 billion yen.

In the Networked Products and Services segment, we also recorded lower sales year-over-year primarily due to the game and VAIO businesses. Exchange rates as well as lower PS2 sales impacted the game business. VAIO sales were impacted by a decline in average sales price due to the shift in mix to lower price models, by decreased unit sales and by exchange rates.

In the game business, PS3 hardware unit sales increased significantly, exceeding 3.2 million units in the quarter. We also achieved double digit percentage increases in PS3 software sales year-over-year. PSP unit sales for the quarter were approximately three million units and 1.9 million of PS2 were sold.

In the Picture segment, our results were inline with our forecast for the quarter and we remain on track to achieve our forecast for the year. The second quarter had difficult year-over-year comparisons as in the prior year, we benefited from the blockbuster title Hancock, and we did not have a comparable release in the second quarter of the current year. In addition, the results for the current year period also reflects significantly higher marketing cost for upcoming films, as well as fewer home video releases. As is normal course in this business, the timing of theatrical and home video releases, impact the quarterly results and for the full year, we remain confident that we will achieve our forecast for higher operating profits.

Turning to the Music segment, we now consolidate Sony Music Entertainment, whereas in the previous year it was an equity affiliate. On a pro forma and constant US dollar basis, music business enjoyed a 6% increase in sales year-over-year.

Strong sales of Michael Jackson catalog product have helped to partially offset the continued pressure from lower physical sales. In addition, continued expense reduction contributed to a 12 billion yen improvement in operating profits year-over-year on a pro forma basis, yielding a profit of 8.6 billion yen as compared with the loss of 3.5 billion yen.

As I mentioned earlier, the results of the Financial Services segment were quite strong. Revenue increased 101% year-over-year due to an increased Sony Life.

Operating income of 32.8 billion yen was recorded as compared with an operating loss of 25.3 billion yen in the same quarter of the previous fiscal year. In the current year quarter, the Japanese stock market rose 2% whereas in the comparable quarter last year, it fell 16%. This had a positive effect on our results as we mark to market certain securities in the portfolio at Sony Life.

In summary, the most significant upside to our previous forecast comes from Consumer Products and Devices and Financial Services. We continue to aggressively transform the company and continue to work toward improved profitability and cash flow.

With that, we'll be happy to take your questions.

Question-and-Answer Session

Operator

(Operator Instructions). And our first question will come from the line of Kota Ezawa with Citigroup. Please proceed

Kota Ezawa - Citigroup

I have one question for you. That you mentioned total restructuring benefit will be 330 billion yen in a former conference call in Tokyo, but your breakdown does seem to be due to pause like labor cost, SG&A or some other elements please?

Nobuyuki Oneda

Yeah out of 3,300 (inaudible) savings, roughly speaking, 2,000 of the savings is coming from the labor related expenses and 1,000 is the other expenses like advertisement promotion and some of the amortization of the unutilized equipment. This is very roughly breakdown of the 3,300 yen distribution in cost.

Kota Ezawa - Citigroup

I have one more following follow-up questions, is this 330 billion yen a part of item for today's rapid revision? If so, the projected plan of what sort of benefit comes from the restructuring program and what is the rest of this portion in a whole picked up 50 billion yen at operating profit this time.

Nobuyuki Oneda

Well about 3,300 savings, partly is coming from the last two years investment which is about 750 yen which we made in fiscal year '08. That will be probably developed into this fiscal year with over 1,000 yen and this time we are going to invest about 1,300 yen and then the next year we'll probably save about 860 yen. That is the kind of the investment amount and those are the saving amount for the following year. And this year so far, up to the second quarter, we could already enjoy the almost 80% of the 3,300 yen savings. Is that clear to you?

Kota Ezawa - Citigroup

Yes. Actually my question was, today's upward revision, it's about 50 billion yen I think, can we understand that, the part of this upward revision is based on you restructuring program benefit and...

Nobuyuki Oneda

As I told you in the day time, the upside revision it partly comes from the consumer product in a group and about 300 yen out of which, some of the amount is coming from the disruption in the related expenses for the TVs and wireless. (inaudible) part of the savings had included yet.

Gen Tsuchikawa

Let me just clarify the adjusted numbers. As Nick has explained to you about the 100 billion coming from the structural transformation and that he said two-thirds comes from HR related expenses and in addition to that, there will be 50 billion coming from these advertisements, and the rest of those from the reduction of general (inaudible) right?

Operator

And our next question will come from the line of Evan Wilson with Pacific Crest. Please proceed.

Evan Wilson - Pacific Crest

I have three questions. I think I'll them one at a time. First is on the TV business. You mentioned in Japan earlier today, that there is the potential to bring some TV models that you had planned to launch next year into this year. Could you discuss that strategy and what do you think the impact would be on profitability and pricing in the TV business?

Sam Levenson

Well, the impact on the profitability is very difficult to tell you exactly how much we're going to save. But the main reason the why that we have to introduce the new model which originally, we anticipated to introduce in the spring time next year, was that our competitors particularly like Samsung, their product feature is unfortunately superior than ours. Particularly in the LED, satellite features. They planned that technology not only with top end model, but also the mass production models too. Of course, we have the LED-backlit model in our product line, but that was only for the top line items.

So therefore, our lineup was not so strongly enough compared to the Samsung. So, our strategy is to introduce the new models, the spring models as soon as possible, probably sometime as in February this year. By doing this, yes, that we have to invest some of the additional promotional expenses for the current model, that is a negative factor, but by introducing the new competitive model, other than planned, that will generates some profit. So, overall we'll generate some profits for us in this sense.

Evan Wilson - Pacific Crest

The next question is on the PS3 also in Japan, you had discussed some specifics about the gross margin in the PS3 hardware after the price cuts. Could you talk about the specifics for gross margin for PS3 as it stands now and what your outlook is for gross margin?

Sam Levenson

Well let me put it this way. The competitive cost versus the price, as of September, the cost is probably higher a little over 10% compared to the price. But we are expecting towards the end of our fiscal year, which is March next year. The cost is probably one digit higher than the price, in other words, probably somewhere in the middle of the 5% or 6%. So therefore, we are expecting that sometime following fiscal year, relatively break even across the profit for PS3 operations.

Evan Wilson - Pacific Crest

And then the last question is on the PSP. So, far in the first half of this fiscal year, shipments are tracking down about $2.6 million versus the first half of last year. What gives you confidence that in you reiterated forecast to sell one more million PSPs this year than you did last year.

Nobuyuki Oneda

Some of the areas that we already introduced the PSP® go, which is the new model. For some areas that we're going to introduce in next month, right? The will increase hopefully over hardware numbers for the PSP and also at the same time, the big software program will be introduced like Gran Turismo during the coming holiday season. So that will hopefully putting the numbers over the software and hardware at the same time. So therefore at this moment we are behind compared to the original plan but we are not so pessimistic to achieve the original project.

Robert Wiesenthal

On the PSP® go, we have also started as you know the networks services on only say Wi-Fi device. So there is no physical media. We have just started porting over many of the movies and television shows associated with that. That takes some time to build up and if that library expands and improves I think you are going to see a very strong take up rate for not only the device but also the revenues associated with this service.

Lacy next question please.

Operator

And our next question will come from the line of Daniel Ernst with Hudson Square Research. Please proceed.

Daniel Ernst - Hudson Square Research

Two questions, if I may. On the guidance for the full year since the revenues are down about 6% year-over-year, but your revenues in the first half have been down 19% year-over-year. So that implies some top line growth in the second half and given where you have been trending and where the economy is and where probably the yen is, is sticking or what gives you confidence in getting some top line growth to get you to that full year revenue guidance.

And then my second question is, on the excellent progress in the Consumer Products Division yielding the 30 billion yen improvement to the forecast. Does that forecast imply or is it assumed that there is some turnaround in the profits of the television division in the second half? Thanks.

Nobuyuki Oneda

To answer your past questions, in our industry usually, there is a seasonality and the first half is usually 40% to 45% of the annual sales will be sold and the 55% to 60% would be sold in the second half. And in the case of the game business, probably 70% or more would be sold in the second half. So, therefore it is natural that [the growth in the second half].

Daniel Ernst - Hudson Square Research

Growth in second half, right?

Nobuyuki Oneda

So, seasonality wise for the (inaudible) some game is fundamentally you know (inaudible).

Daniel Ernst - Hudson Square Research

Just to follow up on that question, but it's understood that the seasonality, but gross rates I was referring to were on a year-over-year basis. So, already assuming the seasonality of course, in the model but the deficit that you created in the first half again, down almost 20% year-over-year makes it hard to yield a minus 6% for the full year even with seasonality, and I'm looking at year-over-year not first half versus second half.

Gen Tsuchikawa

I have a quick point, but the first half when you compare year-on-year, the first half, you are comparing with the great things and the second half you are comparing with Lehman shock. So that the levels of the sales you are working off are very different sales. So, when we are comparing year-on-year and a 20% reduction for the first half, we are comparing the great days before Lehman shock and the current economy. In the second half we will be comparing pretty much on both worlds are after Lehman. That's why we think that we can achieve sales in the second half at relatively similar levels to what we've achieved in the previous year. Does that make sense?

Robert Wiesenthal

Also to adding to cost and the equations, the biggest growth compared to the first and second half is coming from the game business and the other area is the picture areas. Also the second half, turns the big titles like 2012, slate will be introduced into second half.

Nobuyuki Oneda

Your second question CPD, 30 billion yen improvement, where does it come from? This is mainly coming from the areas like component areas and digital SLR cameras and camcorders. TV is almost same as we expected.

Daniel Ernst - Hudson Square Research

And for the second half you expect to either become breakeven or create profits in TV?

Nobuyuki Oneda

Well, TV will not to be a breakeven this year unfortunately. I mean the sales volume would be same as the forecasted level. But profitability wise it's enough to breakeven, still we'll be the raw situations unfortunately.

Operator

(Operator Instructions). And our next question will come from the line of Yuji Fujimori with Barclays Capital. Please proceed.

Yuji Fujimori - Barclays Capital

First of all in terms of TV business, it looks like first half TV losses was better than the original guidance, but second half operating losses is even worse than the budget. And could you remind what is the risk behind this and also Oneda please give us the sense of the probability of these kind of risks will really realized

Nobuyuki Oneda

We are slightly behind quantity wise, slightly behind of our original forecast in second quarter roughly speaking about 400,000 units. And if we continue that situation and also at the same time we will introduce the next Spring model two months earlier than original schedule then it could be a real big mess. So, therefore to clean up the current model, we have to spend some of the promotion expenses or some bundling items to clean up the current model as soon as possible. That is the main reason of some deterioration of the profitability of the second half compared to the first half. And also in the first half of that year, we don't have to do so much the promotional activities compared to the original plan.

Yuji Fujimori - Barclays Capital

Okay. However, in my last calculations, in the first half the one TV set lost around may be $30, but in the second half you're maybe expecting more than $80 to $90 losses from one TV set. Is that realistic or this has some room to be [upside]?

Nobuyuki Oneda

Well it really depend upon how many units would be in the markets and also on our hand before the new products will be introduced and we are consulting some of the bundling program like giving the PlayStation 3 over some Blu-rays. So that will cost some good money. $80 million is not the unrealistic number.

Yuji Fujimori - Barclays Capital

And the second question is in terms of working capital management which showed a very impressive result so far I think. And first of all could you briefly touch on the specific initiatives behind this improvement? And secondly, I am curious how recent decision to sell, to find out TV plants to in Hon Hai will impact on the working capital in the future. Thank you.

Nobuyuki Oneda

First of all, our improvement over the cash at this time is coming from the inventory control. We didn't develop the new key supply chain in our used system yet. But by more careful procurement or the production of the distribution system, we could successfully reduce the inventory about 5000 yen within the one-year period. So this is not so much the sophisticated systems leasing but was careful peoples handling is the main reason of the inventory.

And also some of the vendors, we successfully increased the payment timers even though it's just started. But that's another factor that we improved in our situations. And your second question is of course of the [cash wads] Baja, California plant would generate the cash to us. But operational wise for the past couple of years there is not so much big impact toward our bottom line because they will succeed our employees. They will actually employ our existing employees without any payroll cut. And also that still their model is they are going to use our specified parts like panels, still they have to use the Samsungs' or the Sharps' or whatever that year, which we are going to decide.

So for the past couple of years I don't think there is a big improvement over the cost but of course there is some because they will introduce another company products that would reduce their overhead expense. And also some small parts that they will procure by themselves they will enjoy the summing of volume discounting of the benefit. Some deductions over the costs but I don't see any big reduction for the past couple of years.

Operator

And our next question will come from the line of Mark Harding with Maxim Group. Please proceed.

Mark Harding - Maxim Group

Couple of quick questions, firstly, around the TV side. First, if you could share your thoughts and have some targets on outsource manufacturing? And then secondly there was I guess a comment during the earlier calls regarding to moving towards profitability on the television side requiring you to look beyond the hardware. If you could just provide a little bit more color around that as well, it would be great?

Nobuyuki Oneda

Yes, currently under the digital era a little gradually difficult to make a differentiation for the television businesses. So, therefore and also the assembly areas, the final assembly areas, there is a less, the profit is expected in this area. So therefore the we would do still the engineering or the design side or see our final assembly areas, we will try to increase the percentage of the assembly to the outside EMS in operations.

Robert Wiesenthal

On the second question, it's Robert Wiesenthal speaking. Nick mentioned in our meeting today about beyond hardware. And what he was referring to was about the use of visual services on our television set. Right now, as you know, we have the PlayStation network; the PS3 and PSP®go that is migrating to the television, the Bravia overtime. Right now there are already is a service in place called the Bravia internet links that allows people to watch television shows and content from various networks. Last year, we were the first company ever to show a film directly to television owners outside cable and satellite and we have more plans in the future. So that's really what refers to is that service stream which will generate revenues beyond the threshold of the retail store and that is something that is just beginning with IPTV and I think you will see a lot more to coming months.

Mark Harding - Maxim Group

Okay great and then if I could just touch on the timing of the remaining restructuring charges or I guess that's another way to think about it is in terms of profit margin for the remaining two quarters of the year, can you give us any color on that?

Nobuyuki Oneda

Turning over to your remaining restructuring charges, restructuring charges will probably continue not only this year but also next year too. But major restructuring is probably done within this fiscal year. And opening margin for the Q3 and the Q4 is not disclosed yet but I think that we are not to be so much affected because of the restructuring expense is the reason.

Operator

And our next question will come from the line of Jed Latkin with ING. Please proceed.

Jed Latkin - ING

Actually a few questions, since we have the launch for the PSP®go in October. Have you guys factored in like what sort of split have you factored in between the 3000 and in the PSP®go? And given the significantly higher ASP and underlying margin how is that going to affect the margins in the games business? And is that higher ASP offset enough to mitigate the losses on the lower price PS3?

Unidentified Company Representative

Hi this is Mark (inaudible) our visiting CFO speaking. On the PSP®go we have only launched in major countries in Europe and the U.S. so far and some countries in Asia the Japanese launch will begin next week. So we don't have a full grasp of how this product will evolve but very roughly speaking, for the fiscal year, we aim to do north of 2 million units. So that is the kind of numbers that we are looking at for PSP®go. Now as we have a higher ASP compared to the 3000 that will result in a higher margin for us. I don't think it's appropriate to compare the margins on the PSP®go with the loss on the PS3. I think you are not comparing apples-to-apples where our money is money. But I don't think it's appropriate to answer your question in this way.

Jed Latkin - ING

It's more of the margins for the entire division as a whole as you change to a more download base system that should increase the margin to the business and what is the assumption for the change of the margins. Are you also the breakdown for software sales like what percent are you assuming its going to be download versus physical distribution?

Nobuyuki Oneda

This depends on what kind of tie-ratio or tax ratio, what will happen for the PSP®go. As you know the PSP®go is only download. There's no package media that you can play on the PSP®go. So the margin structure on the PSP®go depends on tax ratio as well as the breakdown between the first party and the third party content. Obviously, the first party content will have a higher margin. So we cannot disclose in detail how these margin structures are at the moment. But in the end, we have our businesses shift towards the download side of the business, our margin will improve. That is our basic assumption.

The network model should be efficient compared to the package model because there are no physical discs to the manufactured, no inventories to be carried et cetera, et cetera. and we don't have to worry about shelf space at the retail floor. So I am talking in very general terms. But as we progress we hope to increase the part of the download business as much as we can. But this translation will take time I guess because no fault consumers have the connectivity to neutralize the full features of the PSP®go.

Jed Latkin - ING

And just one final question on the music business. I mean given the launch of the Michael Jackson movie, what are you budgeting in for the continued Michael Jackson effect for the remainder of the year?

Nobuyuki Oneda

Well, we are not disclosing the numbers. But let me put this way. So far the Michael Jackson CD business in United States is about 500 million units and global basis it's about 1500 million.

Jed Latkin - ING

What? 15 million…?

Nobuyuki Oneda

500 million units in the U.S.

Jed Latkin - ING

Correct, 15 globally.

Nobuyuki Oneda

15 being global.

Operator

As a reminder Ladies and gentlemen (Operator Instructions). Our next question will come from the line of David Leibowitz with Horizon Asset Management. Please proceed.

David Leibowitz - Horizon Asset Management

Good morning. A few questions; one, in terms of the PlayStation how many years do we have to wait to you believe before we will have a next generation of architecture either from yourself or your two major competitors?

Robert Wiesenthal

We are not disclosing those kinds of question. I am sorry, we can't answer that. Needless to say that the whole premise of the PlayStation 3 with this network connectivity and Intel processor is that it is something that is actually better today than it was when it first came out and it continues to grow with more and more digital services. This platform has lots of life. So that's something that we are really not spending a lot of time talking about at this point. Right now we are just continuing building this platform.

David Leibowitz - Horizon Asset Management

Okay. Second question, could you go over for calendar year 2010, your major theatrical releases and your major musical releases that you have on schedule right now?

Robert Wiesenthal

Sure. On the music side right now, its actually, we have terrific line up with albums from John Mayer, Leona Lewis, Alicia Keys, Britney Spears and then Susanne Boyle from X-Factor and then Adam Lambert from American Idol. And then with respect to films we are very excited about "2012" which is tracking incredibly strong that comes out on November 13, which is an incredible science fiction film with the John Cusack and Amanda Peet. And then during Christmas, we have romantic comedy called "Did you hear about the Morgans" with Hugh Grant and Sarah Jessica Parker.

So that's what we are kind of looking forward to right now. And obviously, "This is it" opened up on Wednesday in 99 countries and did $20 million, which is actually a record for a Wednesday. And we are very excited about the start of that film and we will see how this weekend goes. And at the cinema scores for that film were an A across the board at all ages so it's been a great week for the picture company

David Leibowitz - Horizon Asset Management

And there are still more questions if I may; the first one, right now how much money do you leave on the table because of piracy either in recorded music or in film distribution?

Robert Wiesenthal

Needless to say piracy continues to be a problem both physically and digitally. But actually trying to quantify this is very, very difficult. But we are taking a lot of measure including, for example even as Michael Jackson film that opened simultaneously across the world at the same time because of issues that camcorder piracy and piracy at film processing lab, day and date releases are actually a lot to curb piracy getting the films out there but also giving legal alternatives to consumers both on the music side and on the film side. It's really how we do our best to try to curb it but there is really no stopping it altogether.

David Leibowitz - Horizon Asset Management

And last question; turning to consumer photography. Are you gaining or loosing share at the mid and high end to some of your ach rivals such as Canon and Nikon as well as all the others who are in the field right now

Nobuyuki Oneda

Yeah I think we have talked about the Canon or the Konica type, what's for the one [lenses]. We are not losing the market share, we are the late comers. And our target was the 10% industry but now that our shares are about 11%. So we are not losing shares.

David Leibowitz - Horizon Asset Management

And what share market do you think you need to continue moving forward in this process or is there a chance if you can't get beyond your current market share that you withhold and move onto other products that offer more promise?

Nobuyuki Oneda

We don't know how fast and how big these categories will be expanded but at this moment that creates more than 10% market share with the additional profit is our immediate target.

Robert Wiesenthal

Just to clarify the shares I am talking about is for the DSLR market not the compact digital market.

David Leibowitz - Horizon Asset Management

Understood. And I'd say thank you very much. I will open it for other questions.

Operator

This concludes the question and answer portion of today's call. I would now like to turn the call back over to Mr. Sam Levenson for any closing remarks.

Sam Levenson

Just want to thank everybody for joining us and remind you that our IR teams in Tokyo, London and New York are ready to answer your questions. And we look forward to speaking with you in the future. Thank you so much.

Operator

Thank you for your participation in today's conference. This concludes your presentation. You may now disconnect. Good day and good evening everyone.

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Source: Sony Corp. Q3 2009 Earnings Conference Call
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