Thank you for waiting, ladies and gentlemen. I'd like to start the session for the quarterly earnings announcement for the second quarter of fiscal '14 of Sony Corporation. And I introduce our speakers. In the middle -- sitting in the middle is EVP and CFO, Representative Corporate Executive Officer, Kenichiro Yoshida; on the right is SVP, Corporate Planning, Hiroki Totoki; and seated on the left is Vice President, Senior General Manager of Corporate Control, Kazuhiko Takeda. And today, first, Mr. Yoshida will give you a briefing on the second quarter results as well as forecasts for the full fiscal '14 year. And then we will have question and answers. Altogether, we plan to spend about 1 hour. With that, Mr. Yoshida, you have the floor.

Thank you. My name is Kenichiro Yoshida, Sony's CFO. So I would like to spend the next 15 minutes discussing these 2 points on the agenda, starting with the results for the second quarter. In the second quarter, consolidated sales increased 7.2% year-on-year to reach JPY 1,901,500,000. On a constant currency basis, sales increased 3%. And the consolidated operating loss was JPY 85.6 billion, which was a deterioration of JPY 99.5 billion year-on-year. And this significant deterioration was mainly due to the recording of a JPY 176 billion impairment charge for goodwill in the Mobile Communications segment, which announced on September 17. So net loss attributable to Sony Corporation's stockholders was JPY 136 billion. The difference between the JPY 180 billion impairment charge, which was announced in September, and the actual JPY 176 billion impairment charge is due to the fluctuations in the foreign currency exchange rates. And so as a result for the first half, we recorded an operating loss of JPY 15.8 billion. Next, this chart shows the second quarter results for each segment. As I just mentioned, the operating results for the Mobile Communications segment deteriorated significantly from last year. On the other hand, excluding the All Other segment, into which the PC business was transferred, all of the electronic segments other than the mobile business and the entertainment segments as well as the Financial Services segment had all shown improved operating results year-on-year. And this shows the results for the first half by segment. And here, too, every segment, other than Mobile and All Other, showed an improvement in operating results. The next slide is not included in your handouts, but we showed the same chart in the last earnings announcement, and this shows the trend in Sony's consolidated sales and operating income, excluding the sales…

Thanks very much. I would like now to proceed to the session for question and answers, and our staff will be bringing a microphone to you. Please identify yourself by stating your name and affiliation before you ask your questions. And when a question is asked in English, there will consecutive interpretation into Japanese. And the answers will be provided in Japanese. In the interest of a limited time, please limit yourself to 1 -- 2 questions each. And now I'd like to see if there are questions. Please raise your hand. I see a hand in the first row.

Okazaki, Nomura Securities. Firstly, with regards to the second half outlook, I have some questions. How could efficiency made on game and Devices business during the first and second half, the profitability declined significantly, and why is this the case? I'd like to ask you for your reason of this.

So during the first and second half for the Game and Device business, in the second half, the profitability -- the level of profitability would decline significantly, as you suggested. And this is because we take a very conservative view on the second half results. In second half, the reason is that we are going to record a considerable restructuring-related expenses or costs. They're not just submitted [ph] to game and Device businesses but in all business lines in the business restructuring it will continue. And to the extent they're idle in capacities, they will be eliminated or the acceleration in depreciation will be made. So those are part of our plans. And also there will be an impact of ForEx exchange rate. So those are the factors. And also, Mr. Takeda will explain some specifics of the game and Device business, respectively.

So yes, about the game business and the Devices business, as Mr. Yoshida just explained, and my point may be a little bit additive, but there are 4 things I'd like to highlight. First of all, the game -- the network business, the GPN will have an impact about JPY 12 billion; negative JPY 12 billion is our estimate. And also in the second half toward the holiday sales season, the Christmas season, if you look at the forecast in the -- in markets such as the one in the United States, computers will be carrying a lot of promotional activities. And therefore, we have to take a very conservative view of the competitive landscape. And also we have a plan in the United States to initiate the cloud-based TV service, and we're looking at the cost related to that. And also we are disposing of the nonprofitable assets in the meantime. And on the Device side, there will be a positive impact in the second half. But image sensors, in particular, we had to pursue a differentiation of image sensors to increase their competitiveness. And therefore, our models for '15 and '16 fiscal years we'll be spending some invest money -- investment for R&D. But due to the most recent mobile business market, the developments have been very drastic and volatile; and therefore, we take the conservative view. And as in the game business, we are disposing nonworking -- nonprofitable asset in this line of business as well.

Concerning TV business also, can I ask for your view of the quarter -- the second half. And then you have registered black ink for 2 consecutive quarters. So I'm sure you're having a good feeling about full year. But then again, this business has been losing money for 10 years, so you are still cautious. But given the recent situation, what is your outlook for the second half?

Let me continue to speak on that. So the TV business, there've been negative impact of the currency fluctuation as far as the TV business is concerned. And as was the case in the first half, there's a competitive environment. Competitive environment is getting very intensive -- severe. And this happens every year. New models are launched in the first quarter. But because of the competitive landscape, we have to work on the pricing, and we are taking a very cautious view of how our pricing would end up. And as Mr. Yoshida explained, if you look at Latin America or the Chinese market, again, there is intensive competition. Competition becomes stronger, and therefore, our plan is to -- not to aggressively increase the volume of our sales there.

We are going to go to the second row.

Ono from Morgan Stanley. I have 2 questions. The first question is as follows. You announced a major restructuring in February of this year, primarily on the corporate side and also restructuring of the sales companies. How are they progressing? And have you felt any concrete effect or benefits from this effort?

Sales companies and the corporate headquarters, those are the question that you've asked. I think simply stated -- I think they are progressing steadily. On the sales company side, I think the advancement is ahead of the original schedule. It's very difficult to quantify, but Electronics or AV aside, the sales companies have been successfully reducing the fixed costs.

If I may supplement. At the beginning of the year, we stated that there will be about JPY 40 billion of positive effect as a result of the restructuring on the corporates and sales companies. And I believe that the -- this set of number is indeed achievable during the fiscal year.

The second point is on the mobile business. You've reduced 50 million to 43 million. And now you are further reducing to 41 million. So there have been 2 downward revisions. So you have revised downward the number of units earlier and also this time. Are they due to different reasons? If there is a different reasons for this particular revision, what would it be? The reason why I ask is because -- can I understand correctly that you will not be making any further downward revisions anymore? The TVs, I think, you have entered into a strategic reduction mode ahead of the market advancement. But compared to TV, mobile is the space that Mr. Totoki will be responsible for. But you did make a downward revision. But do you think -- how aggressive or far -- how far advanced are you in this planning?

I'm sure Mr. Totoki may would -- may want to supplement. But basically, China would be downsized dramatically, and we have incorporated our view on China in our numbers. [indiscernible] supplement, if any. But this time -- no, the last time we talked about the restructuring, and we have reduced the number of units according to the restructuring. So it's not dependent upon the market development but rather based on the strategic intentions.

Yes, the person on the front row.

Katayama from Merrill Lynch. First question, new forecasts for the full year and the thinking behind that. As Mr. -- the CFO explained, on the 25th of November, Mr. Totoki will be explaining the thinking of the Mobile Communications. The restructuring costs. There's a possibility for restructuring costs to increase. But even factoring that in, there's no need to change the full year number. I don't know which number will come up. But taking that into consideration, this time you came up with this number for the full year. Is that a fair understanding?

Yes.

My second question, next fiscal year, you may not have time to think about that, but imaging, game and Device, you have clear, strong businesses. And then the areas where there are problems, you are already taking countermeasures. On the material, on Page 20, JPY 311 billion. And VAIO, they will completely gone next year. So excluding special factors, you are already exceeding JPY 300 billion mark. So in view of the good business, JPY 400 billion, Mr. Hirai does not make commitment. But look [ph] from this, Mr. Yoshida, based upon the good business how close do you think that you can go to -- close to JPY 400 billion? The right side, the good side, forecasting upon the good business, how close are you going to be to JPY 400 billion? Can you explain?

Mr. Hirai is talking about JPY 400 billion, so we have to aim for that number and do our best. That is our goal I believe. We are approaching that number. But still, restructuring this year, we are planning to -- we'll be able to do what we intended to do for this year. But as you have asked, the additional restructuring in the Mobile Communication business, we are making plans right now, and it would take some time for that restructuring to be actually implemented. So this may have impact upon our next fiscal year's results. I hope that answers your question.

Thank you. Let's see if there's -- well, actually the next question. I see a hand in the left-hand side of the room.

Nakane from Deutsche Securities. Just one question about the impact of the ForEx, the currency. By segment, Device is positive and the others where there's positive impact. But for each change of yen, how large is the impact for each segment? Can you give us some -- the figures for each respective business segment, the impact on operating profit?

Well, as I always say, in total if the yen is weaker by JPY 1, the negative impact will be JPY 3 billion for the year. But Takeda-san will give you some more information in breaking this down into different business segment.

First of all, the weak yen and the segments where this works negatively, the negative impact, that's Game & Network and also Mobile business as well as HE&S, including Television business. And the others, the IP&S and Device, in these segments, the weaker yen would have a positive impact. Does that answer your question?

Not really.

So in terms of the order or the size of the impact -- or the size of the negative impact, it's Mobile, Game & Network Service and HE&S in that order how the negative impact works from large to small. And the positive impact works first on Device business and IP&S, in that order. So for each change in the currency by JPY 1, the impacts felt by the business segments in the second half I just gave you the order of how the impact will be felt by the respective businesses.

We are staying in the front row.

Ezawa from Citigroup Securities. I have 2 questions. The first question is the Others, the businesses Others, and about the second half of this year. Under the new guidance -- and I'm referring to Page 7 -- in terms of the operating profit, you have downward revised by JPY 17 billion, so it's JPY 272 billion. Now in the first half, it's JPY 80 billion. So compared to the first half, this negative size is quite big. So what is included in this number? Or what expenses do you plan to book? And I'm sure you are trying to be conservative, and you're may be assuming some additional expenditures, but you did say that the guidance will remain intact. So what are the factors have been incorporated into this number? That's my first question.

Mr. Takeda would respond to your question.

Yes, as you have pointed out, it's JPY 260 billion to JPY 270 billion, so we have added JPY 10 billion -- or JPY 11 billion. In the past, we have provided you with explanation that JPY 50 billion of risk is incorporated, and that number remains intact. But for the restructuring expenditure, we anticipate that the level will remain as is. That is to say that we have sort of enough buffer for potential risks.

I find it very difficult to understand. You said there's a buffer of JPY 50 billion. And separate from that, are you saying that you may add another JPY 50 billion for restructuring?

No, that's not what I have said. Let me rephrase it. On the corporate side, we are looking at the business risk, potential risk of 50 billion that remains in cap. The reason why we have added JPY 10 billion, as is shown here, is due to the elimination or the write-downs or the disposition of some of the fixed assets. And some of that impact has been incorporated in this number. I would also like to add the VAIO losses . Loss of the VAIO business, there is operational risk, and the risk coming from the discontinuation of the business. So there is a reduction by JPY 10 billion. But why is it that we're adding this number here, JPY 11 billion? I'm personally communicating with each business unit, and I'm saying try to make yourself as lean as possible. For instance, in the digital imaging, compact cameras, digital cameras, the production facilities -- the production facilities of the old model of the lens, and 200-millimeter wafer lines are not used to the fullest capacity. And we are trying to consolidate those assets so that they can become as lean as possible. And that undertaking is ongoing, and we're trying to incorporate the potential risks coming out from those actions. And that will translate into JPY 21 billion, roughly speaking, yes.

Another question is that it'll be a longer talk on the restructuring. The details and the overall picture I trust will be given on the 25th of November. But of course, you will not be able to cover all of them on the 25th. Therefore, maybe you would like to take some preemptive actions and explain to us about the mobile business and TV. In the long run, what is it that you intend to do? What are you -- how are you designing the future of these 2 businesses? The reason I asked this way is that you may want to discontinue the business by a certain date or -- I'm not asking for that decisive statement. But mobile for the high-end business, let's say, what would it be in the 5-year time, what are your intentions? So can you give us an overall picture of what you intend to achieve or where you would like to be in 5 years' time for the mobile business?

So Totoki may want to cover mobile. But the mobile or TV, we will not be chasing the volume. It's not the size that will matter for us. Rather, we would like to enhance the differentiation, and we will be focused in certain areas. When we announced the impairment on the 17th of September, Mr. Hirai stated that for mobile we will be focusing areas. And also for the products, that we will shift to a higher added value. Likewise, for the TV, we have reduced the number of units. So again, we will not be chasing after the quantity, but we would try to establish this business as a business that would have a stable earnings flow. TV, actually the volume increased after we turned red. That is to say this business was profitable until 2003. And up until that, the volume remained flat. But after that, the volume increased and has resulted in the volatility of the earnings or the performance. Therefore, we are aiming for stability. I think TV should be a business where we can expect a stable earnings flow. Mr. Totoki?

Well, in the immediate future, again, we will try to be resourceful, creative, to try to increase the earnings, and we will take on the measures and actions. Now you asked in 5 years' time. I cannot quantify the time. But in the medium term to be more competitive, we believe that we will have to work on the differentiation of the product and also the technology. And also -- so we will have to be prepared. We will have to be ready to really differentiate. So -- but in any case, I would like to work for the balanced business operation.

Yes, the person on the first -- front row.

Ayada from Daiwa Securities. I have 2 questions. First question, to confirm, the second quarter profit level, excluding mobile, this level is close to your actual capability. In the first quarter, you said that there was a difference in timing of the expenses, which resulted in inflated profit. But in the second quarter, there is no such case that timing difference results in higher than actual profit. For first quarter, that was one factor. And also there was a gain from sales. But in the second quarter, to the extent of my knowledge, there's no major such special factors. There's nothing special. My second question, Page 9 of the slide, Game & Network Service, right top,. Second quarter has P/L improvement, and breakdown is written here. And second quarter as compared to last year, network sales is increased by JPY 30 billion. So this has impact upon the P/L. How much impact did it -- that have up on P/L? And on a full year basis, network business in this term, there will be more profit or costs will be incurred. Therefore, for this year, you're not able to see much profit, but profit will not come until next year.

First, network business and other business and breakdown between these, I'm sorry, we haven't -- we are not disclosing that, so I would have to refrain from making comment on that. Your second question, network increased results in -- increase in profit and what would be the impact. Naturally, with the sales in -- increase in sales, there'll be increase in profit. But traffic is increasing now, and at this point, cost is also increasing. However, it's not linear relationship. It doesn't increase in the same way as the profit. So we can expect profit to be generated from out of that.

I'd like to invite other questions. Yes, a hand in the first row.

Yasuda, Ace Research -- Economic Research Institute. I'm going to ask this question about the game business. You had improvement in the first half. So for the full year forecast seems to be very, very conservative. And the JPY 50 billion upward revision was made, and PS4 is doing well, you're saying. In terms of hardware units and software sales, you're not changing the annual numbers. So this JPY 10 billion upward revision, why and how are you making these revisions? And also with regard to next year, currently, the PS4 performing dominantly in terms of share compared to Xbox. So I think you're in a much better position, superior position compared to the Xbox challenge, so to speak. So even though the third quarter may -- the profit may decline, next year operating margin I would think would rise significantly. But how are you looking at the game profitability? For instance, are you -- do you think that the game profitability would double next year, kind of 35?

The full year forecast seems to be rather very conservative I think was the tone of your question. Yes, in terms of sales, we are very conservative. But then again, as Mr. Takeda explained, we have to prepare for the impact of the weaker yen because it's going to be a negative impact that this business will feel. That's why we are taking a very conservative view regarding the annual forecast. But upward revision of the sales, and you yourself stated this, the business is currently [indiscernible], and doing rather very well. And getting into some detail, in September, 2 big titles were released. So thanks to that, the number of subscribers also network sales gaining momentum. So combining all these factors, we decided to revise our sales -- the number upward. And also in the third quarter, December is the biggest season. And thankfully, we had the momentum. As we approach the holiday season, we expect to sell a lot. And the second point is that the price cuts done by Xbox, how we are faring. How are we fairing? Well, for the opening part of the next -- for the next year, we will find another opportunity to explain that until that -- on the 25th of November, we will be holding the IR Day there. The [indiscernible], the top management from game business is going to explain about the directions that we anticipate in the game business going forward.

Well, I guess you're -- I suppose you are more positive and bullish about the next year compared to this year. Or are you not?

Are we more bullish? Well, it's not as simple as that. It's difficult to say. But the third quarter is the time of reckoning. I very much hope that we can be really bullish for the next year. On the strength of the results, we should be able to achieve in the third quarter.

Mitsubishi UFJ Morgan Stanley. My name is Yoshida. I have 2 questions. First is Imaging Products & Solutions, the first quarter and the second quarter continued to register a high profitability, 2 digits. I believe that the higher added value model have contributed to this good result. So you are not chasing after the volume, and you're working on the cost. So I think you have made great achievements. So do you think that from now on that the further restructuring will result in the higher profitability of the product? Is my understanding of the vision correct? So what is the source of this strength? And can you talk a little more about the background of this development?

In Digital Imaging, of course, they had made steady efforts to reduce the cost. I think that matters a lot. But if you recall towards the end of my presentation, I said that Mr. Hirai is truly committed to the product. And of the different products, he's truly committed to this particular area, so the strength and the appeal of the product have really been enhanced, and that is contributing to our better performance. And this will continue to be the case next year or to further enhance those products and their profitability.

On the Device side, the batteries, I think you will continue to improve. So if possible, what is your target for this fiscal year? This is more for the confirmation sake.

I'm afraid I -- we're -- we are not disclosing the details about the battery.

But compared to the past forecast projections, are you making upward revision or...

Maybe it's about the same or a little better than what we had been saying before.

Any other question? Yes? Yes, the person on the front row, please.

Katsura from UBS. Electronics is important. So you have been talking -- focusing upon electronics. But entertainment details of the business will be explained on the 18th of November. Mr. Yoshida and Mr. Totoki, when you look at the entertainment business, how are you going to position entertainment business? And how are you going to grow this business? And Mr. Hirai, in the conversation with Mr. Hirai last year, you're talking about 100% and the equity capital relationship and the direction in the future, if you can share that information with us, please.

Going forward, this is an area where profit has to be increased in the entertainment business, especially Pictures it's going to be like this. But as necessary, the investments will be made. We will have to make investment. And in the first quarter, as you know, [indiscernible] we made the investment in the United Kingdom, CSC Media in the United Kingdom.

Secondly, restructuring buffer, you will have some reserves. And mobile, as we move toward the next year, you referred to a possibility for further restructuring. Cash in and cash out, additional restructuring costs, if it increases, then free cash flow is at 0 basis, according to the current plan. But if additional restructuring occurs, then are there going to be additional actions, such as additional sales of assets?

I talk -- I touched upon that absolute amount of debt as the interim period is a time when demand for money is large. On a net-net basis as compared to last year, about JPY 320 billion decrease. Of course, maintaining rating -- credit rating is important. And about availability, capability to finance, we do have that availability. And at this point in time, we are not considering selling assets.

Let's see if there are any more questions. If not, at this point, we'd like to conclude this session. I'd like to thank you very much for joining with us despite your very busy schedules.