Sony Corp Ord (SNE)

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Sony Corp. (SNE)

F3Q10 (Qtr End 12/13/09) Earnings Call

February 04, 2010 8:30 am ET


Sam Levenson - SVP, IR

Nobuyuki Oneda - Executive Deputy President & CFO Sony Corporation

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

Gen Tsuchikawa - Senior General Manager, IR Division


Daniel Ernst - Hudson Square Research

Yuji Fujimori - Barclays Capital

Kota Ezawa - Citigroup

Jason Mauricio - Arete

Mark Harding - Maxim Group



Good day and welcome to the Sony Corporation third quarter fiscal year 2009 Financial result conference call. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of this conference. (Operator Instructions). I’ll now turn the call 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 [Akita]. Good evening from Tokyo and thank you all for joining us today February 04, 2010 for the discussion of Sony's third quarter’s results. I am Sam Levenson, Senior Vice President of Investor Relations at Sony Corporation of America and with me on the conference call tonight, is Nobuyuki Oneda, Executive Deputy President and CFO Sony Corporation, Masaru Kato Deputy CFO at 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

With that, I'm now going to turn to today’s announcement.

I will 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, and our detailed earnings release are available on our website for your access.

During the third quarter the company continued to successfully execute on each of its major initiatives and operating profit for the quarters substantially exceeded our plan as announced in October. Excluding restructuring charges and equity in affiliates, our operating profit for the third quarter was 165.5 billion yen as compared with 4.8 billion yen in the third quarter last year. All of the Company segment except all other recorded improved operating results year-over-year.

Due to the better than forecasted results and after review of our outlooks for the balance of the fiscal year, we have again upwardly revised our full year outlook for operating loss from a 60 billion yen to 30 billion yen. This 30 billion yen improvement is comprised of 25 billion yen improvement in Consumer Products and Devices segment, 25 billion yen improvement in the Financial Services segment, a 10 billion yen decrease in forecast in the B2B and disc Manufacturing segment and a 5 billion yen decrease in each of the pictures and NPS segments.

During the quarter we continue to make significant progress in substantially reducing inventories and timely managing receivables and payables As a result, our cash flow has continued to improve. We are very pleased to share with you that Sony expects positive cash flow from operating investing activities combined excluding the Financial Services segment’s activities.

With respect to the structural transformation process that we initiated earlier this year, we continue to make progress there as well. We remain confident that we will achieve the targeted 330 billion yen in annual cost savings, and we remain on track to achieve a 20% reduction in procurement cost as compared with 2008 levels.

Our process of consolidate manufacturing facilities is running well ahead of plan. As a reminder, we started the year with 57 plants and the goal of reducing them by 10% or 6 plants. By May 2010, we anticipate a reduction of 12 plants, twice our initial target as we have identified additional opportunities to shrink our operations. So, to put it simply we are either on plan or ahead of plan for each of our key strategic initiatives.

Before we turn to your questions let me briefly discuss a few developments in each of our key businesses during the quarter. In the Consumer Products and Devices Segment, sales decreased 11% driven largely by price declines in TVs, system LSI and optical pickups. However, due to aggressive cost reductions and improved cost to sales ratio and the positive impact of exchange rates, operating income improved 69 billion yen, year-over-year. A particular note this quarter was at the TV business achieved profitability.

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