索尼 (SONY) 2003 Q4 法說會逐字稿

Good morning, my name is Crystal and I'll be your conference facilitator today. At this time I'd like to welcome everyone to the Sony Corporation fourth quarter fiscal year 2003 conference call. [OPERATOR INSTRUCTIONS]. Thank you, the conference will now begin.

Thank you very much for that introduction Crystal. And thank all of you for joining us today for this discussion on Sony's financial results for the fiscal year ended March 31, 2004. I'm Justin Hill with Sony Investor Relations in Tokyo. I am joined this evening by Takao Yuhara, Corporate Senior Vice President and Group's CFO Sony. Mr. Yuhara would please say a word of welcome to our guests.

Yeah, thank you Justin and as you know this afternoon we released our third quarter results and for ease of communication, I have asked Justin to read the summary of the results we have reported today the highlights of performance. I'll then come and answer any questions you may have. Justin, please.

Thank you Mr.Yuhara, we are also joined by Robert Wiesenthal, CFO of Sony Corporation of America. Mr. Wiesenthal joins us from his office in New York. Mr. Wiesenthall, please say hello.

Good morning everyone here and abroad.

Thank you very much for joining us Mr. Wiesanthal. As Mr. Yuhara just mentioned in just a few moments I'm going to give an overview of our fiscal year results. Then Mr. Yuhara and Mr. Wiesanthal will take your question. During the Q&A session I'll be taking time out to pose to our two CFO questions that we received by e-mail. Please be aware that statements made during the following remarks and Q&A session with respect to Sony's current plans, estimates, strategies and release and other statements that are not historical facts are forward-looking statements of the future performance of Sony. These statements are based on management's assumptions and at least in light of the information currently available to it and therefore we 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. 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 accessed by choosing investor relations at the bottom of the page at www.Sony.com. With that I'm now going to turn to our results.

Consolidated sales for the fiscal year increased only slightly year on year due to the appreciation of the yen versus the dollar. On the local currency basis however sales increased 3%. Sales to outside customers in electronic segment increased and revenue in the financial services segment increase due to evaluation gains and loses from investment. Sales from the game, music and picture segment decrease. Compared to our January forecast sales in all segment increased. An increase in Television revenues in the picture segment, and get release in the music segment were incremental increase in increasing sales beyond expectations. Consolidated operating income decreased 47% year on year primarily due to increase in restructuring expenses. Restructuring expenses increased from 106.3 billion yen to 168.1 billion yen on a yearly basis.

Compared to our January forecast restructuring expenses were approximately 18 billion yen higher than expected. Consolidated operating income increased on an operational basis by approximately 17 billion yen beyond our expectations. This is due to a significant increase in profit in the picture segment, from the increased television revenue, an increase in profit in the financial services segment due to the improvements in valuation gains and loses at by and large. The game segment also exceeded our expectation, where the electronic segment was a little below expectation.

Income before income taxes decreased 42% year on year above royalty income and net foreign exchange gain increased. We recorded a substantial profit in the sale of our equity interest in Telemundo in the previous year. Net income decreased 23% although we recorded a gain from our equity affiliates primarily due to the substantial improvement in the performance of Sony Ericsson. With effective tax rate increased from 32.6 % from the previous year to 36.6%. I'd now like to touch on the progress of transformation 60 our restructuring and growth plan. As I said a moment ago during the fiscal year just ended we recorded 168.1 billion yen in consolidated restructuring expenses. Of that amount 133.4bln yen was recorded for personnel related expenses, while 34.6 billion recorded for asset write down -. On March 22 we announced that we expected to record 175 billion yen in restructuring expenses for the fiscal year , but due to our shifting the earning with the portion of the restructuring expenses that will be recorded the actual number was less than the 175 yen.

We expect to realize approximately 88 billion yen and annualized benefit from the restructuring we undertook in the fiscal year, end of March 2004. The number of people who left the company through early retirement were approximately 5000 people in Japan and approximately 4000 people outside of Japan, so a total of 9000 people. In the fiscal year ending next March, we expect to record approximately 130 billion yen in restructuring expenses. Approximately 120 billion yen of this is of this total expected to be incurred in electronics segment.

Let me take a few minutes now to touch on our business segment, first segment is the electronics segment. Sales in electronics decreased to 1% on a yen basis but increase 1% on local currency basis. Sales to outside customers, which includes our inter-segments, were up 5% year on year. On a local currency basis this increase is 7%. Sales on local currency basis increased in all of our major regions. Despite increase in local currency sales, an operating loss of 35.3 billion yen is recorded in the electronics segment; this was a decline of about 76.7 billion yen versus the previous year.

The primary reason for the significant decline that is 72.5 billion yen increase in the restructuring expenses in that segment. Restructuring expenses in electronics were 143.3 billion yen for the fiscal year. If we were to add back to restructuring expenses to recorded this fiscal year to this year's operating income and the restructuring expenses recorded last fiscal year to last year's operating income. Operating income in the segment decreased only about 5.9 billion yen.

The next segment is the game segment. Total game segments decreased 18% on yen basis year on year. Hardware unit sales on worldwide basis decreased as unit sales of PS 2 decreased in the US, although they did increased PS2 unit sales did increase in Europe and Japan. Overall hardware revenues also decreased to the strategic price reductions on the PS 2 undertaken in all regions during the fiscal year. Overall software sales decreased at Play Stationunit sale and revenues decreased despite an increase in both unit sales revenue of Play Station2 software.

On geographic basis, software sales declined in Japan and US but they increase in Europe. The total number of software production shipments for the fiscal year total which includes PS 2 and Play Stationsoftware was 254 million units and that's more than our 250 million unit forecast. Operating income at the game segment decreased 40% year on year. Although the strong PS 2 software sales contributed the profit, our proactive increase in R&D expenses and the decrease in sales caused operating income to decline.

Moving now to our entertainment businesses, sales for the music segment as a whole decreased 6% on a yen basis that was flat on a local currency basis. Sales at SMEI was flat as an increase in sales outside of US, that was flat on a dollar basis, I should say as its sales outside of the US which increased primarily due to appreciation of the European currency versus dollar, this was offset by the decrease in sales in U.S. Sales of the SMEJ, that's a Japanese subsidiary, were unchanged during the year. Like the flat sales operating performance of the segment as a whole improved, as a 19 billion yen profit was recorded versus a 7.9 billion in loss in the previous year. The primary factors leading to the dramatic improvement in performance with the benefits from the restructuring had taken in SMEI, decreas in advertising and information expenses at both SMEI and SMEJ and a reduction in restructuring expenses at SMEI and SMEJ. Now on to the picture segment. Sales in the picture segment decreased 6% on a Yen basis, but increased 2% on a dollar basis due to significant increase in television revenue. The increase in television revenues caused SPE Sony's Picture Entertainment to record a new record for sales on a dollar basis. Operating income on the other hand decreased 40% year on year due to a difficult comparison with the previous year in which Spider-Man contributed to a great deal to profitability.

In financial servicing segment revenue increased 11% due to an increase in revenues for Sony Life. Valuation gains and losses on investments held by Sony Life increased enough to offset the downward effect of the change in the method recognized in insurance premium received on certain products in the life insurance business. Operating income for the segment went 2.4 times that it was in the previous year, primarily due to improvements valuation gains and losses of Sony Life. I will end with our forecast for the fiscal year ending March 31, 2005 we just begun this April. We expect to record 7.55 trillion Yen consolidated sales, 160 billion Yen in operating income, 160 billion Yen in income before income taxes and approximately 100 billion Yen in net income.

Our foreign exchange rated countries will be near our 105 Yens to dollar and 125 Yens to the euro. Although profit will be negatively impacted by the appreciation of the Yen and an increase in research and development expenses, the benefit of restructuring undertaken in the year, which was ended, and an increase in sales in electronic segment are expected to call consolidated operating income to increase by 62%. We do plan to incur restructuring charges during the fiscal year however and these are expected to amount to approximately 130 billion Yen across the Sony group. Restructuring expenses to 130 billion Yen figure is included in the consolidated operating income forecast of 160 billion yen as mentioned. Consolidated effect, consolidated research and development expenses for the fiscal year are expected to be 550 billion Yen, which is an increase of 7% above the 514.5 billion Yen recorded in the year just ended.

R&D expenses in electronics are expected to increase approximately 10% from the figure of 429.4 billion Yen in the year just ended. A vast majority of this increase will arise from the shift from gain to electronic of all R&D expenses related to semiconductor process technology. This shift is taking place in the fiscal year just begun due to integration of our semiconductor operation across the Sony group. Partially due to the shift to electronic of prospect technology R&D, R&D expenses in the gain segment are expected to decrease 10% from the level of 83.4 billion Yen in the recently ended year.

Now, let me touch on the forecast for each business segment. Sales in the electronics segment are expected to increase in the new fiscal year due to continued strength from the digital still cameras, flat panel TVs, Grand Wega and DVD recorders. Operating income for the segment is expected to increase as well, with the benefit of restructuring undertaken in the prior year exceeding the downward effect of the appreciation of the Yen and the increase in R&D. Sales in the game segment are expected to decrease. Software production shipments will be essentially unchanged at 250 million units, but hardware sales are expected to decrease at PSone production shipments will likely decline to 1 million unit from more than 3 million units in the fiscal year ended last month. And PS2 production shipments were expected to decrease to 14 million units from the 20 million produced and shipped in the year to March. We expect to record 3 million production shipments of the new PSP handheld entertainment system in the year that began this April. Operating income of the game segment is expected to decrease for a better portion of the R&D expense formally recorded there will be shifted to electronics, continued investment in products which the PSP and the next-generation computer entertainment system will lower profits.

Sales in the music segments are expected to decrease due to an anticipated continued contraction of the market for music and a reduction in the unit price of DVD's in the segments manufacturing division. However due to factors such as the benefits of restructuring activities already carried out, operating income of the music segment is expected to increase. The effect of the potential joint venture with BMG has not been factored into our forecast.

Sales in the pictures segment are expected to decrease due to the absence of the significant television revenues in the previous year. Operating income is expected to be flat however on a wind basis as the performance of phones released during the year especially Spider-mah2 is expected to offset the decrease in television revenues.

Sales of these financial services segments are expected to decrease because, although an increase in insurance enforce that affected at Sony Life, insurance revenue at Sony Life is expected to decrease due to the change in lack of recognizing and insurance premiums that I mentioned before. Operating income in financial services is expected to decrease because valuation in gains from multiple securities is not included in the forecast.

And with that I would like to say that in the fiscal - in the first quarter ended June 30 2004 there is a possibility that we will record a consolidated operating loss due to a low level of sales and the effect of which of the appreciation of the yen. And with that I would now like to turn the podium over to our two CFOs who would take your questions if they could.

[OPERATOR INSTRUCTIONS]. The first question is from Connor O'Mora (ph).

Hello there, two questions if I may. The first one is regarding Sony Ericsson and basically the mobile phone global markets Sony put a very strong product line at the moment I guess the one risk to its profitability throughout the remainder of the year is a possibility of a price war for handset. Nokia has lost a lot of market share and trying to regain it. How likely do you think it is that there will be a price fall in the global handset market, on what strategy would Sony Ericsson pursue under that scenario. Would it go for market share or would it focus on profitability by remaining a high-end player that's my first question.

OK I answer this question, as you know we compete in the (inaudible) in the mobile phone industries for long time. So from time to time, our competitors use pricing to increase the market share and however we believe that Sony Ericsson is focused on a imaging and multimedia and entertainment and also industrial design get them so long compete in that positions in the markets. We do expect some decline in ASP here in the current quarter with the - but this decline should be offset by the shipments of the new product you just said.

OK that's great and my second question with the regarding the pictures business could you just give us some update on whether Spider Man2 is on time to be released in July and do you believe this picture could be as profitable as the last one if you take theatrical release and packaged media together?

Hi this is Rob speaking from New York. I think we are very enthusiastic about the potential for Spider Man2. It's obviously one of our most important film franchises the film will be released on time as scheduled Wednesday June 30 for the July 4 holiday weekend and you should expect the film to be both entertaining and profitable.

And could it be as profitable as the last one because obviously two year ago Spider Man led to a big up tick in movies profitability.

We are very excited about the potential as one of most important franchises. We don't compare a specific film to others based on profitability and anticipation of the films. But I think we are excited about this film and it is a very important part of our line up this year.

That's great thanks very much.

You are welcome.

[OPERATOR INSTRUCTIONS]. Your next question comes from Stewart Halperin (ph) from RBC Capital Markets. Your line is open please proceed with your question.

Thank you two questions related to the games business. First do you expect a license for PS-2 technology or in the future ,the PS-3 technology to other hardware manufactures so that we might see for example in playing capability built into a cable set up boxes and the like, and secondly if you could please update us on the status of the PS-2 launch in China thank you.

Through this first question and at this moment we cannot touch on to license for PS-2 anywhere else. Secondly the update say that our China business and as you know the - we have launched the business in China back January first in this year and what we just started and I would say you know the it (inaudible) should take time to contribute both in our income and also the profit itself. So first of all we are concerned a very much about how we could set up the business in this new market in China.

OK is it possible to say at this point whether it's tracking a going through your plan or is it too early to say?

Yes, just for your information. And you know by the end of March this year we have released the two software in the China market.

OK. Thank you.

Thanks.

[Operator Instructions] Your next question comes from Edward Williams from (inaudible). Mr. Williams. Your line is open please proceed with the question.

I was wondering if you could elaborate a little bit on PSP as to what your pricing expectations for the hardware unit, your profitability expectations as well. And also looking at software you gave us a hardware unit number for the year but what are looking for software unit for fiscal, year ending March '05 and then lastly if could elaborate a little when you expect the PSP to launch and three major geographic market?

OK. First of all and the timing of the launch in Japan we plan to launch the PSP in this you know the holiday season in year 2004 and as far as Europe and US is concerned we are going launch PSP within this fiscal year before the ending March of the year 2005. And in this fiscal year 2004 we aim to ship around 3 million units of the PSP at the moment. And as you just questioned about pricing and if anything this were really strategic issue about our business, so therefore I would like to decline to answer this question.

Any comments on the software expectations for the year?

Well. Software, as I mentioned above, we are to get in touch with the Hollywood movie studios and also this is still continuing to talk with people concerned about software.

OK. Thank you.

Thanks.

[Operator Instructions] Your next question is from Josh Berwick (ph) from Moore Capital. Your line is open, please proceed with your question.

Hi, could you say if the new fiscal year Play Station 2 guidance includes a price cut in the unit forecast?

In the year 2004, we are - we aim to fix 14 million unit of the Play Station2 and as you know the, since we launched the PS2 back in March(inaudible) year 2000 and now we are into the fifth year, we are still considering this harvest time of this play station. So, therefore it is a still potential and we did not realize this is the very end of the life. So, therefore it's too early to say about the pricing issues at the very end of the life of the Play Station2.

Would price cut potentially change the unit forecast for the new fiscal year?

Well. I would like to decline answer about pricing. The fact is that we aim to ship out 14mln units in the fiscal year 2004.

OK. Thank you.

[OPERATOR INSTRUCTIONS]. Your next question come from Shawn Mills (ph) from (inaudible) Your line is open, please proceed with your question

Thank you I just wanted to follow-up on the Play Station2. In your last conference call, you talked about the production problem with outsourcing production in China that wasn't enabling the company to lower its production costs, it is rapidly as expected. Could do you give us an update on that and talk about expectations for getting the pricing down in the next fiscal year? Thanks.

I just mentioned about the Play Station2 outsoaring to China back to July period.. We have transferred the all production from Japan to China back in July and August last year. as you know that there was a SARS disease incident and a delay in the cost reduction plan. As you know we are quickly following the price reduction effort and together with the design improvement for the PS2, that is the current status. Again price issue and I would like to decline to answer as the since the it is very strategic issues.

Thank you.

[OPERATOR INSTRUCTIONS]. Your next question comes from Peter Bordmann from NWQ. Your line is open please proceed with your question.

OK, I've two questions, first one, I was wondering how the current results are forecast for next year fit in to your long time goals of 10% margin. And the second question was regarding the financial services division, very strong results - I was wondering you to comment about the content about , does it come from new policy or from investing income since a majority that came in the fourth quarter at some sustainable levels specially (inaudible)

OK. As I explained in the press conference today, and in the fiscal year 2004 we are having that very important initiative on the restructuring initiative and secondly investment on semiconductor devices and also strengthen the R&D activities. . So as we are going through the three important initiatives, which involved at the fair amount of the investment this is either preview or you know the just following as what we planned. So therefore the year 2004 we have just working very actively on these initiatives, and we believe to the extent of this initiative we could see that targeted 10% margin in year 2006. So other question about financial services in this revenue on the insurance also increased in the year 2003, but moreover, there is the increase of the revenue and profit from investment side. So this is due to the share price increase in Japanese stock market then because of this we could have large amount of profit from this. So this is the main reason to improve our profit rise in insurance in the year 2002. Thank you.

Thank you.

[OPERATOR INSTRUCTIONS]. The next question comes from Taizo Ishida (ph) from Wellington Management. Your line is open please proceed with your question.

How are you. This is Taizo Ishida from Wellington management. I have a question on the electronic business, I guess the if you have subtract the restructuring charge everything last year, what was the OP margin electronics and what was the previous year and I know I guess they extracted the same charge this fiscal year about 120bln something like that so. If you subtract that what will be this fiscal year OP margin? Thank you.

You know this OP margin it is (inaudible) as you said is for fiscal year '02, we see the 2.3% and the fiscal year '03 again it was 2.2%. So of course you know the fiscal year of '04 is concerned and I just guided the amount of sales and profitability in 04 and therefore, I would like to decline profit margin for FY04.

OK just quick follow up. I guess 5% margin target is just set for the fiscal '05 then?

Yes it is a target as we know the we are rather conservative on profitability of electronics business at the moment. We look at such factors as Forex environment and also the digital consumer electronics products business market.

OK thank you.

[Operator Instructions]. Your next question comes from Connor O'Mora from Erick (ph) Research. Your line is open, please proceed the question.

That's great thanks. Two more questions if I may the first one regards your joint venture with Phillips InterTrust and Microsoft settles the legal dispute with Inter Trust paying about 400m, and Philips said on it's conference call it will book a 100m euros gain next quarter. Is Sony going to also book a gain based on this settlement either next quarter or fiscal year?

Yeah and it is a (inaudible). You know they are partners of this Inter Trust and this gain will be reported in first quarter -- during the first fist quarter of fiscal 2004.

Excellent and it will be over the same amount about a 100m euros.

Yes. This 100m is including that operating performance for the fiscal year '04 the full year.

Right, OK excellent. And then my second is about your package media and business of DVD and VHS together. I am wondering what percentage of picture sales it was for the full year? Under what growth rate DVD units are growing? And also what even from DVD replicated such as technical is they are talking about the back catalogue being a strong growth driver is that also the case of Sony pictures?

Hi it's Robert Wiesenthal from New York. I will take that question with respect to we don't talk about specifically the sales within Sony pictures by subset. But what I will tell you that with respect to motion picture revenues over a 50% of our motion picture revenues are derived from home video. And with respect to DVD units growing obviously the very high growth business for everybody in the motion picture business today grown at sooner from 2002 to 2007 that was 5 years period forecast DVD sales to exceed 20% and I think most of the industry has been saying that over the past year DVD sales has grown over 30%, with respect to the catalogue what I feel that is a very meaningful portion of our home entertainment sales do derive from our are 3500 motion picture library.

could I just ask a related question if, I mean the replication is done by the music side of the business. But, I am surprised that music is looking for sales to be down given that DVD replication if I look at Thomson type of similar all of them are growing in high double digits? Is there any kind of yield problem? Because you are talking about the ASP being down in music but if you get your cuff down that would really help margins in package media by 15% for your peers.

Yeah I mean obviously our Music business does DVD replication for both the games software, Columbia TriSar home entertainment (inaudible) video and music software. I would say that you know we should not confuse unit sales with revenue sales. It's a competitive business in terms of manufacturing and I would not just look into our views on manufacturing as to the help of the business. It really has to be competitive with the manufacturing business at this point.

That's great thanks so much.

[OPERATOR INSTRUCTIONS]. Your next question is from (inaudible) Adolf Missy from JP Morgan. Your line is open please proceed with your question.

Hi just two quick questions just one of that you could breakdown the guidance for the 14m on the PS2 cycle. Could you break that down by region and then also I think someone else tried to get this as you could provide any more account there on whether this 14 m is factoring in some sort of price cut?

This is all the 14 m on the PS2 forecast this into the next year but unfortunately as far as focus is concerned and that we do not disclose the schedule or detail of regional basis. So pricing issue in the game is very strategic issue again in our game business, and I would like to decline to comment. So the fact is we are into chip out the 14 m spread over the process in the year 2004, thank you.

[OPERATOR INSTRUCTIONS]. Your next question from John Taylor from (inaudible). Please proceed with your question.

Hi I got a couple of questions as well. Could you tell us when the development kits the final development kits are going to be available for the PSP to third party developers or give us an update on the status there. Second I wonder if you could go into more detail on the R&D change in the games business from fiscal 03 to 04. What's the impact of the upcoming change and of the increased R&D you talked about how much is related to technology and how much is related to software development? And then the third question is can you give us an update on the Sony Online matrix and how many unique users have logged in to use this service I think it's something like 2.6 million network adapters out there. So how many have actually used the system what's peak usage and maybe what's the largest number of unique set of trade specifically thank you.

OK first question and you know the development kit and we are providing and we are about to release you the software to the company, particularly preparing for the expected launch for the Japan market. And second question R&D is and in the fiscal year 2003 total R&D expense in a game business was 83.4bln yen and that in this year it's about 10% decrease in compared to this. So however the facilities are you know the high level of R&D expenses that we hope you know the continuously, the development semiconductor device and also the platform for the game console as well as software. So this will continue and as R&D in the year 2004. And for the online game, I would like to talk about the total number of activities you know the end of March is apart and (inaudible). And in the United States it's about 2.8 million and in Europe it's about 200 unit for the online game. And also we are releasing and together with that software title for those network online games, did you ask about (inaudible).

Yeah, I was interested in -- OK, so let me just repeat those, just 500,000 in Japan, 2.8 in the U.S and about 200,000 in Europe. I'm curious as to how many of those network adapters have actually been used and many people have logged in to playing online game in each of the regions may be and then you know what's the maximum usage that you've seen or either by simultaneous users or the highest numbers of people that have actually played a specific game like SOCOM II which I think is the leader in U.S.?

I don't have such a data's you know for these at the moment and you know the, I could answer you after this meeting if I could get those information.

Ok, may be hope that for later. Let me go back to the R&D question from moment of a (inaudible). So if I'm hearing incorrectly that R&D is going to be down in total dollars but its going to be the part of that is the accounting change as you recognize in R&D and in another P&L. I wonder if you could give us what's that data is going to look like between two fiscal years. So what's the kind of real increase in spending on the end of technology, new platform technology that and were whatever and then the software?

Yeah, as I mentioned that the 10% decline it was showing that the development of semiconductor process is now moved to electronic segment and therefore pure R&D for the game business and both hardware together the semi conductor and software increased compared to the year 2003. So that's is what we are aiming to invest on R&D for the Game segment.

OK, thank you.

That's, alright.

Yeah, thank you.

OK, I think we can take an e-mail question at this point and this e-mail question comes from Matthew Troy, OK, thank you. Smith Barney, OK, Thank you. The question is, what is the trajectory of digital still camera penetration? Where does Sony the current level of digital still camera penetration and how sustainable is that momentum?

Yes, you know the -- according to the CIPA data(inaudible) there are markets for the digital still camera for fiscal 2003 is 43m unit. The standard projected size of the market in the fiscal 2004 to the 61m unit. So we think that the strong momentum momentum in the data through some of the market that will continue and we think that the same will be the case in the fiscal year 2005. For Sony we sold the 10m unit in the fiscal year just ended at 2003 and that the market share is about 23% and we are aiming to sell approximately 15m unit in the fiscal year that just began giving us a market sales of 25% that would mean that we would maintain our No.1 sales in the market. So things we have seen that they global for the individual and that we don't think of the penetration in terms for the household.

OK, thank you for that answer, Mr. Yuhara. Do we have any other live questions?

Your next question is from Tony Richards (ph) from Piper Jeffrey.

Thank you for taking my call, given a lack of a price cut on Play Station2 and shipments are expected to be down. You are loosing a little bit of market shares you had in the U.S. recently. Should we assume that you are not taking a very aggressive near-term approach with Play Station2 business and then you are taking a much longer-term approach with respect to that business and then the second part of my question, we are hearing more and more that Microsoft could launch the X-box 2.0 some time in 2005. Does this concern management with respect to the Play Station business?

Well, I can't disclose that our strategic issue. You know the reason, I'm not - , I view that the life time of the Play Station2 would be rather long as we know that the PS one still continues which is a 10-year after the launch of our own original model so that does so you know that does the positioning of that PS2 for a life time concern. And about the company such as Microsoft I am not in a position to comment on their strategies or plans for the market. Thank you.

Do you have concerns that the (inaudible) could launch well ahead of the next play station?

Well again, I not the person to answer this question about the strategic issue on this XBox by Microsoft.

OK thank you.

And thank you Mr. Yuhara. It appears that there are no other questions and we are actually running a little bit out of time so I am going to conclude the conference call here and thank you everyone for joining. Thank you Mr. Yuhara and Mr. Wiesanthal, I'd like to take this opportunity to remind every one of our investor relation's contact information, in Tokyo (inaudible) can be reached at 813-544-8180, in New York (inaudible) can be reached at 212-813-6722, in London Chris Coleman (ph) and (inaudible) are available at 44-207-444-9713. Again thank you very much for joining us today that concludes the call. Thank you.