Q: Daniel Ernst - Hudson Square Research
I have a couple of questions on game and a couple of questions from the TV side. First on the game profitability, what is [happening] with contribution from reversal of prior period inventory charges? Secondly,can you comment on the sales of the new Move motion controller?
On the TV side given the deterioration in sales here in North America, what gives you the confidence to maintain the overall forecast for 25 million units globally? Can you comment on the reception or proportionate sales coming from 3D televisions? Finally, could you comment on the recent moves by the US Broadcast Networks to block access to the video sites from the Sony internet powered Google TV? Thank you.
A: Masaru Kato
I will start with the gaming PS3. There are no inventory charges affecting the profitability of PS3 in the second quarter. Cost have come down, again the negative margins on the hardware have been eliminated since last April so, we are in the mode of making money on each unit we sell at the moment. So, the profitability with a combination of reduced costs in the PS3, quite impressive sales on the software of PS3 and reduction in SG&A.
On the TV side, 25 million, a lot depends on how we do in the third quarter which includes the holiday season. If you look at the business on the global basis, its a different picture region by region. If you take the emerging markets Brazil, Russia, India, China they are all doing double digit growth in the TV area at least for our business okay. If you look at Japan our sales is booming in TV because we have this government subsidy in place and you get a refund for certain categories of TV that you buy.
Excluding those areas if you look at North America is a little bit troublesome in that sell through for the past several months have been below last years level, and we see some slight develop in inventory. Thats one soft spot we have. All in all, we are still aiming to do 25 million but a lot depends on third quarter.
A: Robert Wiesenthal
Just add a little bit on gaming, we sold 2.5 million Move machine in the US and Europe and the momentum continues to be very strong, yeah.
A: Masaru Kato
On 3D our expectations at the beginning of the year was to do about 10% of our sales. Its quite early days but so far our forecast seems to be a little bit high in that its a little bit below expectations, but think we have to wait for good software (inaudible) to be available for the consumers to really measure what 3D can do for us.
Q:Mark Harding - Maxim Group
Lastly, I want to touch on a few questions from the Tokyo call, I got specifically relating to the product roadmap for PSP and certain mobile gaming as well as tablet, given that most PC companies are coming out with tablet and PSPs really started to show its age at this point. How you are handling the product roadmap or perhaps I can put this in another way, is there a sense of urgency to accelerate product development for the time to market compete more effectively with some of these non traditional competitors like Apple.
A: Masaru Kato
I dont think we can discuss specific product or features at this conference call. Mobile gaming is a very important business area for us. We started out with the PSP that was our first mobile gaming console, but since then the market as you know has expanded in to bigger arenas that gaming on mobile phones, gaming on tablets, gaming on and also certain mobiles devices.
The PSP being a proprietary platform was more concentrated Id say core gaming segment rather than the light game, but now we are addressing that market as well. I can not be specific as to how we will introduce new product to address these market, but one thing I can say is that we have those markets address and we will come out with products and services to capture the broader gaming market.
I know this will be a clip of answer, but please wait until we are ready to announce whatever products or services that we may come up with.
A: Robert Wiesenthal
In addition to our strength obviously in the hardware, the strength obviously we have strength around our gaming business having our own gaming content. We have the network services and also we have many different types of devices and the interconnectivity between the devices certainly help our business proposition be more interesting to the consumer and thats what we have to do.
Mark Harding - Maxim Group
Okay fair enough. Thank you, very much