索尼 (SONY) 2012 Q4 法說會逐字稿

Thank you, and welcome to the Sony Corporation conference call for overseas investors for the fiscal year ending March 31, 2013. My name is John, and I'll be your operator for today's call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session. Please note that the conference is being recorded.

And I would now turn the call over to [Casey Keister]. Casey, you may begin.

Thank you very much for that introduction, John, and thank you all for joining us today, May 9, 2013, for a discussion of Sony's results for the fiscal year ended March 31, 2013.

We hope you have all enjoyed the music from Davie Bowie's new album, The Next Day While You Were On Hold. My name is Casey Keister. I am from the Investor Relations department here in Tokyo, and with me on the conference call tonight is Masaru Kato, CFO of Sony Corporation, Steven Kober, Executive Vice President and Chief Financial Officer of Sony Corporation of America, and Yoshinori Hashitani, VP Investor Relations at Sony Corporation. Thank you all very much for joining us.

In just a few moments, we will review today's announcement, and then we'll be available to answer your questions.

Please be aware that statements made today during the following remarks and Q&A session with respect to Sony's current plans, 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 accessed by visiting sony.net/ir.

Let me remind you that a webcast replay of the investor meeting held earlier today, along with the slides presented at that meeting, and our detailed earnings release, are available on our website for your access. With that, I'm now going to turn to today's announcement.

I will begin by explaining the consolidated results for the fiscal year ended March 31, 2013. Consolidated sales for the year increased 5% year on year to JPY6,800.9 billion. This increase is primarily due to the impact of consolidating Sony Mobile as a wholly-owned subsidiary for the entire fiscal year, the favorable impact of foreign exchange rates, and an increasing Financial Services revenue in the Financial Services segment.

Partially offsetting the increase in consolidated sales was a decrease in unit sales of key electronics products, and the negative impact resulting from the sale of the Small and Medium Sized Display business and the Chemical Products related business.

Consolidated operating results improved significantly year on year, and a JPY230.1 billion profit was recorded. A decrease in loss from Televisions, in accordance with the Television profitability improvement plan, and an increase in profits from the Devices, Financial Services and Pictures segments contributed to the improved consolidated operating results.

As we said when we announced the upward revision in our results forecast last month, the item that had the largest impact on the improvement in operating results was the recording of sales gains from our asset sales, undertaken as a part of our efforts to transform our business portfolio and strengthen our financial structure.

Although the Fiber Electronics businesses improved year on year, in aggregate, these businesses recorded an operating loss. Net income attributable to Sony Corporation's shareholders improved approximately JPY500 billion year on year, and a JPY43 billion net profit was recorded compared to the previous fiscal year, in which a large valuation allowance against deferred tax assets was recorded.

I will now touch on our forecast for the fiscal year ending March 31, 2014.

Our assumed foreign currency exchange rates for the fiscal year ending March 31, 2014 are approximately JPY90 to the US dollar, and JPY120 to the euro. We expect these rates to have a positive impact on our sales and operating income for the year.

Consolidated sales for the fiscal year ending March 31, 2014 are expected to increase approximately 10% year on year, to JPY7.5 billion, due to the depreciation of the yen and an expected increase in sales in the Electronics businesses.

Although we recorded more than JPY200 billion in gains from asset sales in the fiscal year ended March 31, 2013, we expect consolidated operating income for the fiscal year ending March 31, 2014 to be essentially flat year on year, at JPY230 billion, due to the increased sales and improved operating results of the Electronics businesses.

I encourage you to read today's earnings release for a discussion of the results of each business segment compared to the previous fiscal year.

I will now briefly touch on each segment's forecast for the new fiscal year. First is the Imaging Products & Solutions segment. Segment sales are expected to increase, primarily due to an expected significant increase in sales of broadcast and professional use products and interchangeable single lens cameras. Operating income is expected to increase significantly, due to the increase in sales.

In the Digital Imaging products category, the market for interchangeable single lens cameras is growing steadily, but the digital imaging industry as a whole is undergoing a change, including a rapid contraction of the market for compact digital cameras and video cameras.

Under these conditions, we will accelerate our efforts to enhance our lineup of high, value added models by utilizing key devices developed in-house, such as image processors, lenses, and image sensors. One example is the critically acclaimed RX series of high resolution, premium cameras that uses our high performance image sensors.

Next is the Games segment. Segment sales are expected to increase significantly primarily due to the planned introduction of the PlayStation4 this fiscal year. Operating income is expected to be essentially flat year on year, primarily due to an increase in research and development expenses and marketing expenses related to the introduction of the PS4, offset by the increase in sales.

Next is the Mobile Products and Communications segment. Segment sales are expected to increase significantly due to higher unit sales of smartphones and the introduction of high value added models, as well as the introduction of high value added PCs. Operating results are expected to significantly improve, primarily due to the impact of the increased sales.

Since becoming a fully consolidated subsidiary of Sony in February of last year, Sony Mobile, which is included in the MP&C segment, has been steadily undertaking reforms to strengthen its product development and marketing prowess, improve the efficiency of its supply chain, and engage in restructuring. As you know, the Xperia Z, which combines many of Sony's cutting edge technologies, went on sale in 60 countries from February of this year, and has been enjoying strong consumer acceptance.

Going forward, we aim for Sony Mobile to make a profit by continuing to launch appealing products that combine all of the resources of the Sony Group.

Next is the Home Entertainment & Sound segment. Segment sales are expected to increase significantly, primarily due to an anticipated significant increase in LCD television sales resulting from the introduction of high value added models, and a concurrent increase in unit sales. Operating results are expected to significantly improve, and profit is expected to be recorded, primarily due to the increase in sales and further cost reduction.

In the Television business, profitability improvement measures are progressing smoothly. During the fiscal year ending March 31, 2014, we aim to achieve a 2.5 million unit increase year on year, and annual unit sales to 16 million units, a nearly 40% increase in revenue, helped by the impact of foreign exchange rates, and to turn to profit.

This is expected to be achieved through the introduction of a strong product lineup which boasts higher picture quality and sound quality, and enhanced interaction with mobile devices.

Next is the Devices segment. Segment sales are expected to be essentially flat year on year, due to an expected year on year significant increase in sales of image sensors and battery related products, offset by the impact of the sale of the Chemical Products related business in the fiscal year ended March 31, 2013.

Operating income is expected to decrease significantly, primarily due to the recording of insurance recoveries from the floods in Thailand and the gain on the sale of the Chemical Products related business in the fiscal year ended March 31, 2013.

Next is the Pictures segment. Segment sales on a yen basis are expected to increase significantly due to the year on year assumed depreciation of the yen against the US dollar. On a US dollar basis, sales are expected to be essentially flat year on year, with continued growth in Television revenues, offset by lower Theatrical & Home Entertainment revenues compared to the previous fiscal year, in which several major releases performed well.

Operating income is expected to be essentially flat year on year, as the positive impact of the increased television revenues is offset by lower Theatrical & Home Entertainment revenues, and an increase in investment in new television programming.

Next is the Music segment. Segment sales are expected to increase, primarily due to assumed year on year depreciation of the yen, and an increase in Digital revenue. Operating income is expected to increase slightly, due to the increase in sales.

Next is the Financial Services segment. Although the business is expected to continue to steady expand, segment revenue and operating income are expected to be essentially flat year on year, because the impact from fluctuations in the stock market, such as the increase in revenue and operating income seen in the previous fiscal year, is not incorporated into our forecast.

That ends my discussion of our results and forecasts. I will now turn things over to Kato-san for questions and answers. John, may I ask you to queue up the questions, please?

Thank you, and I'll begin the question and answer session. (Operator instructions) And our first question is from Daniel Ernst from Hudson Square.

Yes, good evening and good morning. Thanks for taking my call. I have two questions, if I might. But first, a big picture, and I'll follow up on a smaller question about Games.

Now that you've returned to profitability, you've bolstered the balance sheet with asset sales, and cash balances are up, and operating costs are down. How do you think about capital allocation for the core business? Is this an opportunity to pay down debt, increase dividends, return cash to shareholders, or potentially invest in other areas of business for growth, software, Internet things, medical imaging -- where is your -- where is Sony's head at, in how to allocate capital, now that the loss-making periods appear to be over, and the balance sheet is a bit stronger? And then I have a follow up. Thanks.

Okay, let me answer your question in this way. Use of cash, I think, you know, we have many ways, and we are thinking of -- in various directions. But in the big picture, since last year, we have defined in the Electronics business three core areas, which are Digital Imaging, Mobile -- which includes smartphones, tablets, and those sorts of portable devices -- and Gaming. And other than that, our Financial Service business are a very important part of our business, together with Pictures and Music and the Entertainment business units.

Now, the allocation of capital among these businesses are, to take one element out first, the Financial Services basically is a public company, and funding for this business does not come from the parent company. So we can eliminate that.

But for the other areas, the idea is to maybe concentrate a little bit more on the core areas, rather than spreading the money around on the various businesses that we have in the business portfolio.

As we have been saying for the past year, we have been in the process of realigning our business portfolio. We have divested from our Mid-Small Size Display Screens. We have divested our Chemical business. So, we are in that kind of process.

So the money, let's say, would go basically or mainly to the core areas that we have (inaudible). Obviously, I am CFO, so I have to take care of my balance sheet as well, so from time to time, this cash would be utilized to pay down debt or repay debt as well. But overall, the intention is to invest in areas of growth.

Understood, thank you. And then, looking at the guidance for Games, I just want to understand how we get to flat operating profit in spite of the launch of the console, which historically has been a loss-making period for the division, as the hardware is typically subsidized, and there's a lot of marketing costs around the launch. So just trying to understand how we achieved flat operating income in the face of that.

And the separate, on a micro level, you have a substantial increase in game software units forecast. But if I understand the footnote correctly, you're not including the PS4 in your unit forecast for the Group. So help me understand how we get software units going up, excluding the PS4. Thanks

Right. Okay, the question was, why is there no gaming business not losing money as past history says when we launch a new platform?

Now the -- okay, the current platforms are contributing to profit, PlayStation 3, etc. That's one layer of income that we have. Now, with the introduction of a new platform, as you mentioned, there are startup costs, investment for marketing, increased R&D, etc., software development.

But one thing I can say for the new platform PS4, what is -- how it is different from the past platform is that the amount of investment that goes into the basic architecture component's hardware device is much, I would say, lighter than the past platform. To be a little bit more specific, when we launched PS3, yes, initially we had a negative margin on each unit that we sold, which was quite big. And it did, you know, come down over time, as we reduced the cost of the console.

However, the initial investment was quite bit, due to the fact that we had to design the chipset, the (inaudible) chipset from scratch. That cost a lot of money, hundreds of millions of dollars. In addition to that, we had to invest money in developing the fabrication, semiconductor fabrication technology, as well as the CapEx for producing the chipset.

Now, all of these amounted to billions of dollars of investment for the platform, which had to be recouped as we sold software and hardware. So compared to that business model, PlayStation 4 utilizes a core chipset. Yes, we have designed it with our own technology, yes, but the core of the CPU is something that is available already. So we're not designing the chipset from the ground up.

And in addition to that, semiconductor process technology, fabrication process technology, we are relying on outside sources. Production capacity, also, we are relying on outside sources, which means that we do not spend our own money to get the chipsets ready. And that, I think, is the fundamental difference in the -- well, the business model this time, and the reason for us not taking a big hit in the initial year, the introduction of PS4.

Now, on the software, you mentioned -- you must be looking at the -- some of the material that we have provided. Now, we are -- what we have changed in the forecast is that in the past, we had shown software units as an indicator of the growth of our business. But from this time, we have switched from units to sales volume. The reason for this, in that in the past, packaged media was the main media to distribute our software. Now, we have a lot of stuff going through the networks. We have diversified revenue streams, like subscription models, selling additional courses for a racing game, additional characters, selling additional weapons for a fighting game, etc., etc.

So what I mean is that the source of software revenue has diversified, and indicating packaged media unit numbers is not representative of the kind of business that we're in. So we have switched from units to dollar volume.

Now, having said that, the increase in the amount over the years, I think basically, it is -- it's a platform business. The more hardware you sell, you get more customers onto the platform, that's one thing.

The other is what I mentioned two minutes ago. The sources of revenue in software is diversifying. It's not just package, it's download stuff, it's streaming, all those things that come into play, are a source of our software income. And that, I think, is the basic reason that we foresee an increase of this magnitude.

Thank you.

Our next question is from Richard Kramer from Arete Research. Please go ahead.

Hi. Thanks very much. First, I have a question each on M&PC, and AG&S, and then maybe I'll have you answer those, and then ask about FS and overall capital structure question.

With the Mobile and PC division, can you talk a little bit about the slight shortfall you had in fourth quarter units, and also, you know, you mentioned about significant improvements in profitability. Can you give us a sense of the JPY97 billion operating loss, how it is split between the smartphone, potentially tablet and PC segment, and equally, in PCs, you talk about a significant sales increase, but you have flat unit guidance. Do you expect that you will be taking market share in a declining market, or do you think you'll be simply getting a much higher ASP for your premium products there?

Well, you asked a lot. Let me take it one by one. The unit sales in smartphones, we were a little bit shy of our forecast. For the fiscal year, we forecast about 34 million units. We came in at around 33 million.

Now, this shortfall, I would say, is not due to the inability of us to push enough product through the Xperia models. More specifically, Xperia Z, as you know, has been quite well received by the market and the carriers, and we are putting all our efforts into producing as much as we can. Having said that, it's not that the Xperia Z is below our expectations, but rather, it's the other models in the lineup which were a little bit shy of our expectation.

Now, ironically, you can say that because of the success of Xperia Z, some of our customer's carriers did kind of, what, reduce the orders for the other product lineup, which may have caused this shortfall.

So, this -- if you look at it in the big picture, the total year, I don't think this is much of a negative sign. We are intending to ship 42 million units this fiscal year, this new fiscal year. And we have high hopes in doing so.

Now, on the big picture on the MP&C, Mobile Product and Communication segment, your second question was the breakdown of the losses between (multiple speakers) --

Yes.

-- and the mobile phone business. Now here, I cannot give you numbers, straight numbers here, but I will have to say that the amount of loss in the smartphone segment of the business, slightly larger than the losses in PCs. PCs, like everybody, we had a very hard time with the introduction of Windows 8, which was not up to our expectations. So I have to admit that for the whole fiscal year, the PC business was a lot.

Now, the loss on the smartphone side, I think this was -- I don't see it as too much of a negative going forward, in that the past fiscal year, we spend a lot of time and effort in turning around this business.

Now, as you may recall, we purchased the remaining 50% of the shares of this Sony Ericsson joint venture from Ericsson last February. This is when it became a 100% subsidiary.

We have put in all of our efforts in putting all the technologies that we have from displays, batteries, image sensors, to come up with the type of product that is worth the Sony brand.

Now the realization of that effort, you see typically is the Xperia Z. So on the product development side, I think we have made steady progress.

Now, other areas like sales and marketing, we have strengthened the sales force in that not just streamlining or strengthening Sony Mobile sales force, but we are combining our resources we have on the ground in the various markets on a global basis by more utilizing Sony electronics, hardware, marketing and sales force, where it is useful to do so. The other areas is that we have streamlined our supply chain.

So, all those combined, 2012 was a year of transition. We did spend some restructuring costs, reduced headcount in some areas. So, going forward, we are expecting to see profit in smartphones this year.

Okay. On the TVs business, you're giving guidance about units up close to 20%, and I guess, speaking with Sony IR in the past, it seems that there was some concern that the weaker yen might actually be a negative for the TV business, because so many of the costs were dollar-related.

Can you walk through how -- what's going to drive this very high unit growth that you're talking about, and also, the profitability when it seems that the dollar is more of a drag on profitability than a help?

Let me explain one by one. Now, last year's unit sales, Television was about 13.5 million units. Now, the current fiscal year, we are looking at 16 million, an increase of 2.5 million.

Now, where does this come from? We'll have to say in the beginning that last year was a little bit -- well, it was not a normal year, in that since we suffered huge losses in the past, by pursuing unit volume market share, when the prices of the LCD television was deteriorating like crazy, we lost a lot of money.

So last year, we shifted our strategy to put emphasis on profitability, or reducing the losses, which meant at that time, reducing, what, not necessarily reducing units, but not pursuing market share for the sake of having a bigger volume.

Now, we lost, in the past, on some models, we lost money on every -- or, the units that we sold. We have drifted away from that strategy, and limited our lineup so that we can make margins on the TVs that we produce. So that resulted in a smaller number of units being shipped.

Now, as you can see, the -- comparing fiscal year 2011 and 2012, our sales volume decreased quite a lot. However, the losses have been reduced by, I would say, more than half. So that was the result of the strategy that we took in 2012.

Now, 2013, once we have the cost structure more aligned to produce profit with lower overhead, lower panel costs, etc., we are now ready to increase volume. That means more money, more margins, and profitability. So that's the basic framework.

Now, how do we do that? One is, you know, we go back to the basics, a better product, in terms of picture quality, sound quality. Second, we will continue our efforts to reduce our overhead and fixed costs. And third is increasing the quantity sales.

So, this -- now, if you look at past history, now it's 13.5 million to 16 million might seem a big leap, but in the past, we have sold units like 19 million, more than 20 million. We have changed our strategy. We are not pursuing this.

Now, in context, this is not a huge leap, but rather returning to -- or, regaining the product position that we had in the past. So I would say last year's numbers were, for a reason, smaller than normal years.

Okay, and maybe the last question, just on slide 13, I'm trying to understand the context of growth in both profitability and sales, or improvements in the Electronics business, with looking at a chart that shows that you're decreasing on CapEx and decreasing your R&D.

Is this some sort of new operating model we should think about for Sony, where the overall R&D and CapEx to sales ratios are going to be lower, especially given that you've mentioned that R&D would actually be up in the Game division? Or is this just a reflection of where you are in the cycle between restructuring and cost reduction activities, and getting some new products out?

Okay, on CapEx, now what we have in those charts, JPY180 billion. This is CapEx for -- basically for equipment, manufacturing equipment.

Now, the capital allocation that I mentioned in the previous question and answer session was that we have set aside some money to invest, not in capital equipment, but M&As, acquiring technology, acquiring resources, maybe in the form of intellectual property, etc.

So that amount, we have not disclosed, but that is the part of the total investment that we are looking for the new -- well, the new fiscal year.

So yes, I think the trend is, we are less, I would say, lighter on CapEx in manufacturing on the hardware side, and concentrate in areas like image sensor semiconductors, where we have good margins, good state of the art technology, and growing business. But kind of lift away from assembly type manufacturings. So you could say that this is a trend.

Now, on the R&D side, this is not reducing R&D, but rather, streamlining or concentrating in areas that we see what we think that more return is expected.

Now, as a technology-oriented company, we sometimes note -- a lot of new technologies, new ideas, but given the position that we have in the market, we have set for ourselves a goal to kind of concentrate our resources in areas that we see as our future.

Now, in Electronics, I repeat what I said several minutes ago. Digital Imaging, Mobile and Gaming would be among the core areas that we will be investing in.

Okay, thanks very much.

Just one note. On the Gaming side, we do have a lot of investment, but this is, in large part, for the development of software for the new platform. It is not for hardware or architecture.

Okay. Thank you.

Thank you. In the interests of time, we do request that you only ask one question. Thank you. And our next question is from [James Olsebord from Ako Research].

Good evening. I've got a question about the MP&C division, if I may. In the smartphone area, you're expecting an increase in units from 33 million to 42 million. Can you talk about -- I know the Xperia Z has been very well received. But can you talk about progress you're making in penetrating in the States? Because I think that's the one area where I think you only have Cincinnati Bell as a carrier. And maybe for this business to become -- to generate, or develop real global scale at improved profitability, you need to improve penetration in the US. Can you talk about that, please?

Yes, certainly. The geographical breakdown of our sales of smartphones, I would say, at this time, concentrate in certain areas, namely, Japan, we are putting more efforts into regaining our position in Europe, and other parts of the world.

Now, the North American market, United States, yes, in the long term, we do have aspirations to increase volume here. But I think we should take this one step at a time, because the US market, although it is huge, it is very, very competitive.

Now, with the resources that we have, I think it is not, I would say, the best strategy, given our position, to compete head-on in this market and get burned. But rather, I would say, increase volume, increase our customer base, profitability, cash flow, and when we are ready, gradually challenge the North American market.

This is not to say that we're not going to do anything in North America -- we will. But I'm talking about the emphasis geographically, how to allocate our time, resources when we increase our business over time.

Right. So am I right in thinking you won't, in which case, make a -- sort of full-blooded entrance into the US market this fiscal year?

Yes, that is correct.

Okay, thank you. Can I ask one -- just follow up question about the MP&C division? You mentioned in your materials a problem with dollar costs being very high compared to revenues. Is that -- and that damaging profitability. Is that basically in the PC area? And can you comment, is that going to continue? I noticed for the Company overall, if you look at foreign exchange sensitivity for the whole year, you -- that was -- foreign exchange movements cost you JPY19.2 billion of operating profit. And as the yen/euro was about flat, that kind of implies for every yen/dollar that moved last year, you lost JPY4 billion. And I wondered if that may -- how much of that relates to MP&C, and whether that structure is changing in the new year.

Okay. I cannot be too specific about numbers, but we'll talk about the general structure related to currencies.

Now, in the past, we have said that for a yen shift in the dollar would mean about a -- sorry, the -- we have, kind of spread our manufacturing base, so that our revenues and costs are balanced, which means that we are kind of hedged against any fluctuation in the dollar.

Now, this balance has shifted somewhat in that for the whole company, due to the fact that we now are increasing volume in the smartphone area, which most -- where most of the cost is dollar-linked, now this balance that we have had in the past is tilting towards a negative impact to our bottom line.

To be a little bit more precise, if the dollar shifts by a yen for the whole entire throughout the year, the negative impact to our operating profit would be about JPY3 billion. This is on the dollar side.

Now, on the euro side, the picture is totally different, and it is a continuation of past trends in that we do not have a high euro-linked cost base, which means that weaker yen or stronger euro means more profit for us. And impact of this has increased compared to last year.

Last year, we said a yen shift in the euro for the whole year would mean about a JPY6 billion positive impact. For fiscal year 2013, we see this number to increase to about JPY7 billion positive.

Now, I cannot be too specific which product category or segment is affected, but basically, if the manufacturing is based, is offshore and dollar-linked, the impact would be higher. And you may say that PC is gaining and smartphones are in those categories.

Excellent. Thank you very much. That was very helpful.

Yes, but you must also -- let me (inaudible) that the -- we do have a sizable business in euros, so if the dollar and euro shifts in the same direction, the negative impact on the dollar side is somewhat offset by the positive impact on the euro side. So overall, the weakening yen is positive for us.

And our next question is from Kota Ezawa from Citigroup. Please go ahead with your question.

-- taking my question. One question, on currency, Kato-san. On mobile handset, TV, digital camera, like consumer electronics products, with those products in overseas business only, if we focus, if this profit increase in the new year guidance, is this because the weaker Japanese yen makes some benefit to increase the volume or business in general in overseas?

And then actually, the connecting question, is there any aggressive strategy to utilize the new currency environment in the Sony's consumer electronics business? Anything in the strategy at all? Thank you.

Let me answer your question this way. Now, what I said as the sensitivity or the impact of the shift in the currencies to our bottom line, is a -- I would say, a simple simulation. Simulation based on unit volume, pricing structure, cost structure of the business plan that we have. So this is a simulation.

Now, what happens in reality is that we are competing in a market, and we have competitors. Now, these competitors may have different effects due to the shift in the exchange rate. So, the -- what could happen is that the additional revenue income we gain from the positive impact of the exchange rate could be -- I mean, kept and flow through to our bottom line. It could be used to compete with the many, many [competers] as we have in the market. I cannot be too specific here. Sometimes it's decrease market cost, or maybe we use it for price adjustments. But this depends on product competition, geographical area, etc., etc.

But the point is, we have more flexibility in doing these things, because of the weakening yen. And I hope this contributes to our competitiveness in the market.

Thank you. I think this is a very important comment, that you have a flexibility in the new currency environment, not necessarily to be aggressive in a strategy. But I think it's good enough to give us the comment that didn't -- now you have the kind of flexibility. Thank you.

Thank you very much. Thank you very much, Ezawa.

And our next question is from J.J. Park from JPMorgan.

Okay, thank you for taking my question. Under [HDTV], you guide almost 20% in your growth in the fiscal year 2013. So, I wonder which region is (inaudible) to gain the shares unit HDTV market since to be (inaudible).

And the second is the panel price should be a big (inaudible) factor for the overall cost structure. Then what's the (inaudible) assumption for the panel price of -- for 2013? And just a question, the FX sensitivity, when you talk about the obvious impact, do you impact on the FX translation gain or loss, or just impact on your operation? Thank you.

In the interest of time, as the (inaudible) -- let me ask you, I'm sorry, I'll reply to you one question, which is the first one, the -- on the TV area, the unit growth, where does it come from in the regions?

Now, basically, since we will come out with new product line on the high end for (inaudible) TV, TVs with more (inaudible) higher resolution, we intend to increase unit volume in all of the markets that we bid in. But having said that, the emphasis would be, I would say, in the overseas market, because Japan, it's -- well, a flat or maybe a slight decline, because as you may know, Japan shifted to the digital broadcasting system about two years ago, and most of the households have kind of replaced their television. So volume here is not that spectacular.

But in other areas, North America, Europe, Latin America, China, the emerging markets, we do foresee an increase in unit volume in these areas.

All right, and with that, we have run out of time today. Thank you very much. We would like to thank all of you for joining us today to discuss the announcement. Please feel free to contact our London, New York or Tokyo Investor Relations offices if you have any further questions.

Thank you all for joining us, and good night from Tokyo.

Thank you, ladies and gentlemen. That concludes today's call. Thank you for participating. You may all disconnect at this time.