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Sony (SONY)

Participants
Masaru Kato IR
Hiroki Totoki Executive Deputy President, CFO, Representative Corporate Executive Officer & Director
Sadahiko Hayakawa General Manager, Finance Department
Naomi Matsuoka Senior General Manager, Corporate Planning, Control Department & Finance Department
Yuri Furukawa Bloomberg
Kosuke Shimizu Nikkei Newspaper
Kana Inagaki Financial Times
Riho Nagao Nikkei Asia Review
Junya Ayada JPMorgan Chase & Co.
Yasuo Nakane Mizuho Securities
Masahiro Ono Morgan Stanley
Kota Ezawa Citigroup
Ryosuke Katsura SMBC Nikko
Call transcript
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Masaru Kato

Ladies and gentlemen, it is now time to start the second quarter fiscal 2020 earnings announcement of the consolidated results. And my name is Kato from Corporate Communications, and I shall be serving as the emcee for this session. This briefing is being held for the members of the media, analysts and institutional investors to whom we have invited. And the session is - can be viewed on the Internet through our investor website.

We have with us the Executive Deputy President and CFO, Mr. about well results the as XXXX. talk quarter the full to as XXXX the Totoki, the of consolidated second year Hiroki forecast for then question-and-answer And be session. will there a for that session anticipate minutes. we And will last about this XX

So Mr. please. Totoki first,

Hiroki Totoki

impact change positive government on in disease are provides as lives, sensors impact, in is expand broad, imposed Sony, customer risks. and has our to an Major both stay-at-home such portfolio In due economy while a of spread our from to new the people's on and restrictions At occurring increase businesses. environment demand you. business. significant certain as rapid society increased the the and a Thank Game the major and primarily resulting our having Sony the image business are changes resilience of primarily well an us negative diverse in having new U.S. where export on COVID-XX augments coronavirus opportunity this geopolitical is Chinese an operating business, as a

reversal in deferred the valuation portion billion. operating a increased the and billion income significant ¥X,XXX.X the as fiscal billion, allowances I net to slightly ¥XXX.X quarter. improvement year-on-year which to topics, quarter high billion consolidated the of before the billion. record increase same Net following tax for consolidated assets here. income ¥XXX.X but billion, ¥XXX.X compared second income to the ¥XXX.X of recorded and to Corporation Income see Japan. operating group the income increased primarily I'd like ¥XX.X taxes quarter the to 'XX Now sales Fiscal to filing explain attributable This year-on-year decreased year in due against ¥XX.X consolidated billion to mentioned you was ¥XXX.X the second for tax previous increased of billion Sony year-on-year was to a stockholders income quarter in

recorded items refer in through extraordinary the Pages excluding X of profit, adjusted of X to please second details For quarter, materials. presentation

by results for two. Now segment quarter 'XX fiscal this the slide shows

the XXXX. income I previous ¥XX billion fiscal for expected show ¥X.X and ¥XXX billion operating compared to sales will expected Next, increase to consolidated increase are forecast ¥XXX with trillion, the is forecast to results to Consolidated billion.

upwardly to forecast net income to ¥XXX also the have Corporation for the Sony's income ¥XXX shareholders taxes We attributable revised before billion. and to income billion

the previous to increase Our operating an compared cash Financial excluding segment, billion of forecast consolidated flow, forecast. the our Services is ¥XXX ¥XX for billion,

the is Our and exchange year assumed foreign currency the $X ¥XXX ¥XXX to to rate the half of €X. second for

our in forecast this will now Now business slide shows explain by segments. our of situation segment. I each the

First, G&NS.

The income of And to primarily billion to fiscal billion to forecast has ¥XXX upward in operating ¥XXX forecast XXXX increased due revised increase billion launch the X. revenue. income been upward billion, forecast hit G&NS well to segment, due and year-on-year a PlayStation big increasing in of anticipating hardware, our with Network as second is Tsushima quarter, and Ghost becoming in Software First, to a first-party demand. subscribers trillion. ¥XXX.X PlayStation ¥X.X revised an billion. ¥XXX.X the Operating Plus ¥XX software previous increasing, the for primarily except the of which result Services XX% stay-at-home to titled increased been all sales software categories has significantly the the performed ¥XX.X compared to Sales billion

XX% year. to positive the compared month have same with April, its demand, profit stay-at-home a Although the and drove up has year, first PlayStation in user continue the to half leveled sales in this segment off peak game compared impact of previous of fiscal in which it September total with play in the time approximately

of fiscal which share last the collaboration date achieved to X.X at high-quality we of X, into for publisher to announcement. units level is half. at expect the the the expect exclusive Last history, the the partners. the the the release we million price PlayStation title month, forecast incorporated announced that of substantial The exceed software launch second launch and price, titles the We in disclosed PSX. a announced aiming more this lineup with of we software year fiscal was earnings our our success. the in to and this and we PSX, for to have to are continue a fiscal first-party we demand sold same This to PlayStation we the of market is any And our we stay-at-home major a one thanks software year, than

great expect We preeminent of software in cohesive our our lineup, the game and PlayStation ecosystem this appealing to due strength community. brand, to shape launch the gamer PSX the

strategy accelerate to user profit and engagement, great gaming reach. by expanding Our recurring and is growth aim to the the sales through on we by driven sales and experiences profit the grow PSX, increased of

previous to Operating revenue And is Sony to due ¥XXX the impact Fiscal increase which opening. ever a and year-on-year in billion, outside segment. Group ¥XX.X recovering. billion to COVID-XX, ¥XX compared album primarily at Recorded our sales the to which to series the channels and and Funimation, XX% became to TV co-produced first year-on-year. XX transfer it from increase as Sony Yonezu days onetime of which is quarter to expected streaming and is hit forecast rate Primarily increased to a business. Japan. fiscal also on Japan because box-office ¥XX popular. revenue 'XX via sales increase to income distributed film revenue a high the negatively billion. XX, In Demon ¥XX.X after continued ¥XX billion, in in October company, the exceeding is grow opened a QX Music released are ¥XXX streaming, is Japan ¥XXX.X exceed and co-distributed, sales Music billion Music The increased the of the by is being was operating in to of in during billion Recorded gain in space, by Kenshi revenue year streaming in is Next streaming a of expected expectations, year 'XX an such income resulting advertising-supported X% impacted to and extremely Slayer, [indiscernible] the released XXXX, our increase due billion billion

expect we this IP not to the We businesses, our contribute to focusing of synergy even across business further on. the entertainment animation enhancement just are

primarily year the in quarter decrease as well the advertising sales the Home, is resulting released a Pictures year-on-year same as in factors. major previous the decreased the impact decreased segment. fiscal decrease media in compared which a significant significantly from QX Next billion, of in Pictures to year, Spider-Man: to Operating ¥XXX.X theatrical Motion revenue Fiscal from to income hit, releases other networks. COVID-XX XX% and due of Far was XXXX for

to income forecast for billion billion for year sales not of increased half. to the Our fiscal the 'XX ¥XX operating has the first but ¥X results has forecast reflect changed,

While licensing. is to progressing crowded and possibility postponing generated will Once and of in in taking Pictures since the restarted and major are cities has show years, motion large a The release office pictures be stages business July. that of theaters the production entertainment have picture the release release TV continues, but model revenue and windows successful and video-on-demand are recovery theatrical steps to where starting as prevent a COVID-XX, the in begun profit over there are competition one Box Motion such films. TV made, spread is our closure the increased studios and theaters reopen, from schedule delayed. major cause U.S. with of recover, we where the motion and sales profit hits multiple of home sales to to

As several the years theaters films not of going results continue for result, able negative financial to forward. our a release will impact on into being

the On by is business, in hand, which negatively was the Media significantly other advertising revenue COVID-XX, recovering. Networks impacted

segment. Next is EP&S the

to ¥XXX.X in sales an reduction an and billion, X% The increased mix forecast billion foreign billion FY of operating due to forecast been ¥XX in No income year-on-year previous income a has TVs. billion, increase But second to ¥XX product for primarily in sales quarter billion. operating to primarily TV. an to compared ¥X increased impact year by due we forecast and change favorable exchange the to the fiscal unit of improvement sales the 'XX due ¥XX.X sales. in the 'XX increase made unit of costs year-on-year currency rates, the increased Operating to primarily to the

was cameras that chain, home of stay-at-home negatively situation we products. and other extreme the COVID-XX recent unpredictable signs recovery operating and demand proven of this as of business Although a for the are of from continuing. it is the video segment products audio the in with of a significantly resurgence stabilization digital supply caution have to QX, impacted Nevertheless, COVID-XX for stability February by early the demand its regained and thanks year,

and can and operations of in we the severe build even the generate Sony's growth. work management will diligently that profit order seeds our to a segment one unity, value circumstances to working improving of are our of as bring scale. We sow real-time our a under to accelerating by efficiency technology, remote business further reality future Moreover, optimizing customers using to the more

year-on-year September operating year XXXX fiscal Chinese are to expected began billion. billion government to a year export XXXX, customer. in the this Even billion. shipments disclosed income for ¥XXX by expect Sales cash to I&SS ¥XX income operating decrease billion to the X expected not second in slightly terminated year to and billion difference cash ¥XX accounting customer announced ¥XX fiscal and August product forecast flow income in decrease to year sales on XX. does Pursuant shipments significantly certain second decreased over the fiscal half segment as operating of is segment. to investing that positive. that between The of ¥XX.X XX, the fiscal we the 'XX flow billion, U.S. of April decreased ¥XXX.X we for today include XXXX, is the and significantly years Next for to to restrictions for any billion, total quarter Fiscal ¥XX.X decrease major the XXXX the to be operating

research ¥XX.X for revising capital and includes and approximately I an income finished inventory end business at expenditures work-in-process operating the the September. addition, earnings of and of on the explained base. the development strategy that situation, the are In of from customer for quarter goods we previous recorded write-down at further announcement this billion perspective customer Based the

do reduce and our increase development to future smartphone research spending the it We we want are reduced approximately XXXX, from capital expected timing be that the expenditures I ¥XX billion We postponing April with explained further customers last expenditures range prudent needs as competitive X of wide to technological time. of prematurely fiscal and for maintain meet of not ¥XXX began a years to the is cumulative billion well think capital because the as advantage.

had it XXXX have success to financial 'XX. recapture in We our The XXXX possible fiscal in is limited. this year fiscal share we year unit fiscal base a is a on year. diversifying impact and for do some year our expanding But on business the basis customer of market lost fiscal portion large think we

recapturing that long we cameras more profitability will an we sales products, expect sensors our to year sensors other value-added driven return year follow XX, profitability to take take through size we and growth. die it recovery the by by year to products those that fiscal commodity leading. higher high mobile Thus, share the substantial trend the to to XXXX. market functionality Through business recouping in March in XXXX Chinese high aim a place of smartphone However, fiscal business for fiscal expect image in the by XXXX the larger value-added of time customers and in increase was ending customer

loss strategy ¥X.X earnest. on valuation Financial held the Services XD insurance and losses is income securities the starting the quarter for applications no our long-term is billion. billion XXXX due in sensors to second gains expansion Fiscal was Financial segment. HAI in in to automotive through sensing Bank to ¥XX.X of ¥XXX.X improvement change capabilities Sony Assurance. well In at use Sony up as our decline at Services year revenue there and of as at mid- business addition, growing that through to primarily ratio flat Operating essentially automobile and an increased billion, Last

Services net increase to revenue separate on billion related Financial account We our insurance to fiscal in products to the due forecast XXXX year variable Sony to Life. ¥X.XXX primarily at ¥XX compared previous increase gains investment an trillion, to in expect

to ¥XXX ratio to We expect operating income for loss billion to ¥XX insurance due increase the the primarily Sony automotive at Assurance. billion, decline

wholly-owned Sony Corporation Financial of on Holdings XXXX. became a September subsidiary Sony X,

our Services Financial information to basis the Going information. forward, supplementary a shown in we quarterly will here disclose segment pertaining on the

the Lastly, our fiscal the This next view into as outlook for today through I year of would like business to current discuss shows from our beyond. momentum each year. to the businesses slide and fiscal next

is have explained results growth major And segment momentum gaining of a on customer. no to long-term COVID-XX plan. financial it past We to in grow we're Thank pandemic. even possible the incorporating to are aim grow start business to the I impact As the profit confidence when to certain a by But that of I&SS which we negative and future change today, mid- more overall. business despite very much. growth fiscal year, Chinese next you there's the is relating medium-range next the the the strengthen from the our returning to we

Masaru Kato

we'll minutes minutes, the past receive the from as next be well The from Hiroki analysts. investors In [Operator as Totoki, will making XX the the in X:XX, first and receiving minutes, questions CFO, media, presentation. questions the starting question-and-answer session XX That four. Instructions]. XX be was we'll at

before So session. for a Q&A our please start wait while we

Masaru Kato

Control, Executive Ladies Vice President We The waiting. charge Senior of Instructions]. be Totoki, General by questions you thank VP the Corporate now Corporate as will the [Operator well Mami Finance the and the in in Hiroki Deputy answered and and from IR; as of Naomi Planning Imada, would CFO; Communications. and Manager Matsuoka, the gentlemen, and open media. questions for to charge President like Senior

hear - in to for The Inagaki-san, [ph] us? Bloomberg, person Newspaper, Financial to please. Financial please. that. you the please. from your Times, please Sorry on please. Inagaki-san, next I need From ask Due question. Times, move first we question, Mainichi can connections, to Takahashi-san That's From think Furukawa-san, Inagaki-san, line.

Yuri Furukawa

Furukawa from Bloomberg. I hope you can me. hear

Masaru Kato

you. hear Yes, can we

Yuri Furukawa

questions. business, I two the Regarding semiconductor have

schedule all, plan, by I Is First that also, the capacity XXXX. CapEx think the there it's And operation? CMOS was of per plan. the production of changes the to March any to the April Nagasaki plant, I of think operating XXX,XXX sensors regarding month, XXXX, start

that? So first And is by to ask modification I the there one question. that was So a should one?

Masaru Kato

question well. as Yes. No, second ask the please

Yuri Furukawa

Okay.

receiving? share semiconductor. second other that America So for that, North China, that, increase us Chinese question, orders manufacturers, is on you're other Anything customer in There's the than please? or the that there can in with customer a certain you

Hiroki Totoki

expanded, The be production resumption we you for starting in respond been of the to a changed plant said has I and about Thank like it's always the and question. first Nagasaki to our question And of all. have would first we'll April production now. the that been question, not that schedule. XXXX, schedule has as

other And Chinese we're has customers, and think some orders, on North on will capacity But from used depend to fourth production quarter facility. it to demand This my customer. a orders. production over plan the the efforts in customers the customers has the this the general, for been factor - also And we production I additional or in the effective. and production, the the that. of I not, production concludes be the fiscal it been when America, to as resumed, start place, And a at revisited capacity facility question, has of will after changes the And for will increased will fiscal think making introducing plan year-on-year. the pace been increase been However, the whether the basis XXX,XXX, XXXX. the the as production a may it's be at major than Chinese in that start. that also be has year, end be increase it's been changed previous on going there In for also, and And whether that decision regarding will production other the no yes, response. which year, when taking facility be our making in will

Masaru Kato

heard Going please. from on second you Kato-san, Kato-san the to question. had hear? we And [ph], Mainichi, do

Unidentified Analyst

Yes.

Masaru Kato

ahead. of Newspaper, go Kato Mainichi

Unidentified Analyst

About anime you ask business about. I is what want to

in annual what And what going or that Demon mean the target? is high about - In the is to terms Music? belong distribution, be Pictures does it of Slayer, in included anime Pictures the the included it to Internet sales? is segment, Or streaming

Hiroki Totoki

you two Thank for questions. the

First big going Slayer about to and is is the segment? And be included And give contribute segment, question the answer. anime of a to will Or animation? hit, is and in streaming in to is it Demon - included is going it is Music the the the side? Pictures the it you Matsuoka

Naomi Matsuoka

so Music image in side, Thank on And segment, you and the contributions know, streaming And they're for Music, to and those the streaming, yes, Slayer, is Amazon is as is the regards contributions. questions. earlier, there anime, too. video where the production. is as mentioned Netflix for as anime revenue, the there's you Demon and segment it such With Pictures

Masaru Kato

the question. take Nikkei Shimizu-san us next next. Newspaper, will be the Let

Kosuke Shimizu

also Shimizu questions. from I have two Keizai Nihon Shimbun.

Earlier, in The sell is is X.X year you first about question million said PSX the that game. the initial units. expected to

Given this, the want may second possibility is PSX it exceed is base. a the question ¥XXX million diversify that The customer achieved? to it you unit that

customer. does will commodity talk specific did on place You about But mean that emphasis a major you more products? it

Hiroki Totoki

Thank you.

the address questions myself. two me Let

about the of but PSX. the we ¥XXX is sales aggregated and to surpass it are a the succeed Yes, the run it PSX First very accumulated game, long Would of challenge, committed unit and in eager sales of million? is exceed PSX.

high would near have we we do China, Now direction development? in value-added to provided right But that the we change technology. now, for I As customer particular you high-resolution, earlier, the have direction term. change that think today, have of a mentioned the in

using will commodity more capture share to For try products. XXXX, we the

big earlier, much so potential custom it we right in custom-made a But Therefore, have Once to it Thank will mentioned lead is value. to grow recovery it I high the On added it's the processes, enjoys have a as scale, to full that as since has track, business. XXXX. certain earnings products, in believe developmental wait until the have we have you. time. you on

Masaru Kato

Nippon please. Ishida-san, Please [ph] your Next Nishi Newspaper, ask from question.

Unidentified Analyst

I hope you me. hear can

Masaru Kato

Yes, you. we hear can

Unidentified Analyst

like that ask. to else question my because to I'd I already withdraw wanted has the question asked somebody

Masaru Kato

Okay. Thank you.

next So to the I From move to please? on Newspaper, [ph], question. would like Asahi Suzuki-san

Unidentified Analyst

hope Suzuki me. [ph] from can Asahi. you hear I

Masaru Kato

Yes.

Unidentified Analyst

First business. question, anime

talking the specific numbers, the second Slayer, the quarter, And Slayer, question, of the what is expecting? customer. What in in second Demon you're the So also forecast? is Demon that contribution specific you the full amount Chinese year were amount also about

numbers, that write-down Could mentioned forecast So beyond about year. inventory that next you share year to Do be? much or any impact the would please? you fiscal the the customer. the year and can, full of the to have again, you more the know Once I like fiscal for extent - would you numbers to as the how this that

Hiroki Totoki

Thank you.

the Demon in is of quantitatively, terms the regarding since what question impact. been the time as now, release. first The it's very numbers, Slayer of short a Actually, and

going only the start so merchandising is And to now. from full-fledged

So business. second that there regarding it beyond and difference about And I can gap, if my I And in specific that see how by an the have half customer question. will other again, much look speech, half. refrain the the impact as half may first second your think between was the and Chinese be the the you been is, has from degraded, half, I and offset reductions. much numbers at customers' been you And mentioned that and second has there now. specific impact how impact in And of first there talking as once its some

recover able gap have due to customers' other you. to Thank that we for business. been So

Masaru Kato

to Going the question. next on

were we us? with Inagaki-san, you earlier. Financial Sorry, are disrupted Times,

Kana Inagaki

disruption me? the hear Sorry Can about earlier. you

Masaru Kato

Yes.

Kana Inagaki

ask Chinese And to what and about Financial been from the Yes. questions I Inagaki am there Times. that's about. customer, like I'd have

to made given Samsung panel, is, Chinese OLED that by for clear. was government, U.S. market. supplying the The They that other the day, Electronics permission

that delay you get in the of So question delayed. And what in-house It the And other statement, of that you for - think the example, half will the that And In to expect And the transaction, similar see? And is software preparation. maybe studio, And estimate similar launch are third-party second is is, second was half? there your transaction? possibility second much get is financial making do about what company's a - you a PSX, will have question, special another in impact you will is I resume the there mentioned. have? And an the about towards to license? the for how games. the license? delay? And soft delay the the extent you

Hiroki Totoki

those you year regards Thank games, transactions a not for is I resumed, after delay like happens your to to - refrain delayed times, I happening. to development for just have September be that it COVID, somewhat. time would have is with About questions. can estimate, without too, the transactions about the delay, you whether included. due in from there this And what say is XX, development is, the license, question. present export development even the to in-house And well, at third-party software is other and this recover. can fiscal the And been COVID, not is but And And in see commenting. we

our impact no So in PSX that that way. there is a will delay launch understanding big the is

Masaru Kato

would turn. like to question. the it's next your move to Asia Nagao-san, Nikkei Review, We

Riho Nagao

hope I heard. being I'm

Masaru Kato

Yes, it's clear.

Riho Nagao

year of the declining. doing I'm But contribution overall quite of second is Game user of quarter, And category. contributing quarter forecast, the to was the of business seems the the sure be as to to the PSX this well For going - be full compared increased. business has with first performance PSX increase overall, August, PSX, apparently the been ARPU of cost vis-à-vis the

for - year. PS contribution So for full this is Plus the the for PSX

Hiroki Totoki

contribution the that understanding, Well, Are of my sales not of think the so I expect, was that that asking we question. but PSX? hardware, about respond let me you contribution the it's to earnings PSX hardware would in state the the that a to increase buy to market having would the being. said for But it contribution customers be I PSX of negative penetration, that, software. time urge will like

ecosystem PSX and will consequence, would be So business, grow overall, a earnings. the activated, as in

quarter. MAU, hours the of the decline customers. the played see we do by how being total of first MAU MAU, our number from Now

stayed year, down was April it at that when last peak, it recorded home. year. the think the people period where increase believe we compared recently, to XX% previous versus I of more to same I But the in has come

So trend been what has stated. have things have that you changed stabilized. But in reflected

as sustained. level second will half second the be believe as So far is current concerned, or quarter the we that

Masaru Kato

Thank you.

of are we out running time. think I

shall the last question the So next [ph] be Shimbun, Nikkan From question. Kunihiro-san Kogyo please.

Unidentified Analyst

from can I Kogyo hope Nikkan you Kunihiro hear Newspaper. me.

Masaru Kato

we can you. Yes, hear

Unidentified Analyst

X exchange do the are November in the be U.S. U.S., rate in in foreign on will from view U.S.? there elections there presidential any presidential the impact or the And elections how your the business? you And impact

Hiroki Totoki

very are now, view for our Thank results impacted. Yes, is forecast all. to we full the of depending you. the monitoring But it That's That's right be not carefully. on the now. year election,

Masaru Kato

Thank you questions. many for the

time media. members the it close the this of with So is session to

analysts those of at please wait So responding until X:XX. to session, Starting change be questions. next participating need will the to who X:XX. the the We in the membership persons

Sadahiko Hayakawa

Deputy from Hiroki Naomi JPMorgan, your as Matsuoka; Totoki, CFO, would questions Finance Senior Global Senior and acting and Instructions]. and now Corporate investors take Executive I Hirotoshi Finance We Korenaga, to in IR. Vice [Operator VP of General President. our emcee, Senior Accounting the your patience. and have charge from we we Ayada-san? Division answer and for IR, President; I To and like the questions, you Thank Hayakawa, Control, have analysts. and am Manager, Planning am

Junya Ayada

please. two Games, questions, This JPMorgan. I&SS of and is Ayada

sensors, going explanation other And recover have with on could process? to after reason? come can next products basis. that, you? you to an can gave work earlier supply hard link doesn't market a So regain year increase. shares that you you maybe share the to First custom image this volume Or so In about market will have And pricing? you question, toward the it's give the shares probably, words, customers talk capacity Totoki-san to the to

to specification, competitors, maybe and bit seem customer, higher-definition, a your behind. it's different a to be the compared So catalog you high-resolution,

second And is if be level slide I confirm problem. next adjusted? So is seems year, go can the games. on, The to the then a about I'd showed question, that. a that you may it It's is like that at sunny. fundamental Games it not end,

connection will the the - going stay-at-home to It next it add-ons the in there will that and PSX, sales, next And all. background the will this, that, year, cycle absorbing understanding? of be improvement maintained the the that a Is That's of And be level. not right decelerate software at is go and with so new factor? network, be year, will demand of high down.

Hiroki Totoki

you Thank for those questions.

I&SS towards to First micron, battlefield And main commodity, to share. will of make And so be as it's to fine all, efforts. year we pixel, catch and year, will fine for it regain well, next say, - this price, the have question, X.X probably, the you scale next up. if have we -

than margin higher-resolution, more so And fall. will the

be will customer base. However, fronts towards will so business second to higher-quality, foundation be supported. And be Games. an extent, that done are and there needs customer XXXX, our the on it expand get we will will And commit higher-resolution that, upgraded. that pursued. to about And having share both question and direction, our we in And will

year there's in showed the perspective. lineup, reputation. please and look momentum, onwards, very well, we The upfront, next of the business it's we And forecast, the like it's And terms software is that misunderstanding, I'd strong no customer to this not picture. reason the results demand for at have say there. so from PSX So why that the sunny, strength

customer year, that expectation. expanded There's the believe, we more. So can even next be base,

be reinforced and to mid- revenue be the long will increased. will service recurring So term,

essence mid- year, expansion the see rather term much but of what we kind the where competition. of long so not can over it's So single That's to the be realized.

Sadahiko Hayakawa

Apparently, you to on difficulty. Mr. like Ezawa-san, the Securities. would from can next Citigroup move to We telecommunication is Ezawa-san us? there a question. hear Ezawa-sama?

move So the From us Nakane-san. let person. to Securities, Mizuho on next

Yasuo Nakane

made Nakane. My I year, have questions. you revision. operating a for The name the is two income full

it quarter, went second The up.

the Some well, half, realized question. the the But Can had That's you second do upward some in impact. already. first give expect segment? been by you details

second The question.

operation, stated rather, the customers and end sell of utilization capacity for the the and of of capacity customer is end inventory. it it's You input, commodity the alternative for down? a year the capacity that products the billion written to - if The product? ¥XX.X write-down, number at Can you year of the have the the always and prospects commodity you

Hiroki Totoki

the first this referring between first of and I on balance self-explanatory. are question, consolidated basis, think a think, you're numbers, The the the second half. is The question to I

good explain impacts. short-term a them But and most me temporary will it The And by it that in looks the first deteriorate half each let of second was half period, half. segment. are

costs half, launch course, incur we First, demand, half. of was the Services, And would Game stronger that & PSX. stay-at-home to first second Network in demand

second We would of be reform there the So impact, half, impacting. shipment theatrical a first Music. anticipate had gain any, reform terminated is EP&S, the numbers cost. transfer I&SS, the look release increase the merchandising we anticipate cost there recorded structural second of marketing first theatrical release. there a are forward that during business. the if Onetime in cost. the to increased. half, be half, will was the increased few, There Music, very half that Therefore, been customer. has costs, almost. certain certain will been first the Chinese the Therefore, structural second no requires the than marketing trend half. has and onetime Pictures, half,

business any incorporating customer not half. the are we that during So to second

overall for later. an year, valuation say Bank. full Bank. were But entire Sony revisit look inventory increase momentum, is picture, understand securities has the of there Sony the you strength, think facility. at this our business the would of an fair that development. should the affect really been the Others first, capacity it the utilization our if I to strength, year. at Services, actual you is there gains enumeration, at shall So I to new the Financial the There adjustment look business that

Now capacity third and about now, the is we wafer quarter I&SS, the XXX,XXX. input the which - for months. But XX,XXX master right are doing X input, is average XX%,

forecast. quarter, range our the will During be master, at the the fourth of bottom it

in be there orders But less XX% future. order About we today. the be So order, our of we That or higher. improve first of be strength the does increased production, adjust fourth there increase in also possible the would quarter, will customers, next the much of any fiscal inventory, be how an demand will demand order, and as will is assumption part the capacity. will would our of numbers of the year. be from and it this not Should in of reflect incremental the than terms the receiving

We at the will end would do, inventory the right level level. should have to at inventory those also be year of determine we what look the to the what observe and

a for any point strategic So We but forecast it would inventory, the doesn't flexible the like premature demand at to inventory. course, is our time, too But be is - be of assume because give determinant. this would assumption simulation of you indication. to we strategic

think amount there a be order. reasonable will I additional of

this Now the than majority about be is and say write-downs, greater customer, sales customs customs the the commodity it's to terms specific fair to of sales - in volume. certain But commodity. would the

Sadahiko Hayakawa

Next question from Ono-san, Morgan please? Stanley Securities, MUFG

Masahiro Ono

I'm Stanley, Ono. Two questions. Morgan

related is and general the question, gaming to more one First strategy. other question, a

continue But in the I second ability COVID-XX overall to favorable. in you more you, the - or throughout with for profits I think very situation, in to under segments, generate are Mr. change the So results, this can opportunity. think favorable and that turn going strong according the you fiscal quarter, and Totoki, you the next is results the in And converted the it's there major very make things to third year, to you to Please are us. it think to continue year? - anything share next have that

Game. for strategy regarding Secondly,

You in year. have last invested Epic Games

you're you're it you're going to aggressively been going have - to to business publishers? these that a going to Is norm? have relationship are gaming going And So think And it kind to something content, with talking you with some stake publishers. what of the you've have make acquiring. be action some you're is I going content with the about

these you has Can partners? with that share are aggressive addressing position tone a bit little us being Or the which not changed? more So than you you before? are with

Hiroki Totoki

major have profit-generating capacity businesses. So the fell and segments, regarding the the that on I the

that the a it. demand the that be circumstances, is entertainment, it period. situation, actually, in And there's under best that cannot I and the to that as included lot COVID-XX business people. under that with this also But felt for COVID-XX to the still is have creativity executed there's And was effort I that these I remotely. situation. people this with appetite had for And the people think possible speech, finding in I that entertainment. that increased about Even restrictions, something biggest have strongly during the in COVID-XX can So I mentioned have feel my of work people by work, is report

life year. consulting have the the if And But the face-to-face. feel each Sony I contracts terms may, we compared do there previous good acquiring a of So of working feel. Financial remote for in Services, now the Life, back is planners new are to for with been that I services, segments,

with I business. So remote we still can opportunities and capture grow think the activities,

No, Regarding think about stake a to with question the the have relationship the we we your games, and the do in don't so. publishers publisher. have

want you alliance If our to favorable any an these we contents be content goal of And that lot probably have have remains or high-quality case, customers. going a to to and unchanged. as so capital a you for relationship maybe have a that is this or can items on if alliance, in our engagement strategy. we deliver is But platform in-depth to it access

to to have much as you. good we Thank So we would like can. as access content

Sadahiko Hayakawa

Citigroup. Next question, Ezawa-san from

Kota Ezawa

Sorry, I to I from questions. had would some ask problems. This like is Citigroup. Ezawa two

I is some the is Pictures, in company In results, business. Motion plan of think the and quite profit have be secondaries, But you along differences. half, will that there with and Pictures time, think theatrical what severe. I second And subcategory, question, view the First the level? terms

And a think years So the if could I'd hear you I few take it like you for aspects, talk said digital about that. will recovery. to

year, the the some Pictures first hear you to the how for kind to recover That's So would question. are going next breakdown. of business? I like

question, capital allocation. Second

think. operating Now been has flow upward, plan time, I revised this cash

is so this favorable. you And -

investment, downward. the revised been that's On lowered hand, or think other I capital

coming are present use to way what be to money flow, cash allocated? you I'd flow, hear with thoughts. money, your you the do free the it? So new like out, how going to is additional cash Some going it

Hiroki Totoki

please. first of the breakdown you breakdown the And Thank Matsuoka-san, that of about the image could answer. question the you is the the What's if Matsuoka-san, for is segments. question. Pictures, the questions. And

Naomi Matsuoka

speaking. Matsuoka Yes.

will So compared the production of I Pictures fiscal contribution to way. happen, no would quantitatively. releases. the almost of in what the future, year, year to image I that previous there's profit speak have in cannot speak The this really

home for year. movies those and which have be be that last or streaming, coming from you came what or year. there could So can is for And situation, not this there the derived being routes, entertainment out income sales those out

if some will half, movies there the marketing big first But with recoup. half, it have be coming no hand, expect in will will other we And the advance there means there delay, in that be then premise, the release second was the we and and out. resumption. marketing On involved. will a of costs be But to that's that,

And release, entertainment so have you profits. home performance, you and usually have a that with theatrical

that's COVID, we releases, structure. will is, release, media be naturally, after is But TV can up for and theatrical be one uncertain And factor. happen so a make well, an Therefore, that that the will delay. will networks And to movie that the segments other whether that And with programming. what the will the be factor. seeing prediction, my a hit,

Hiroki Totoki

capital allocation, give you let the Now me answer. about

billion million, And change. subsidiary, repurchase. no reduction ¥XXX we cash announcement, strategic ¥XXX if that, stock from investment. a change billion first revision And Bilibili than flow, have Epic this this it's upward time, there's in strategic policy. as is explain and showed So of may about billion, time. and quarter in results, we CapEx being And possibility billion already investment, also And is other you we a of what the a - last that wholly-owned said, If previous ¥XX there's it is I ¥XXX same. there's ¥XX investment, is

So opportunities. my recently, there in That's increase are M&A feel.

and various strategic And Therefore, have sense, investments in so investment. there are segments, in good opportunities to we analysis that a have timely for the in manner. a strategic conduct

Sadahiko Hayakawa

is time short. afraid running I'm

the So question. take we SMBC Nikko, will Katsura-san. last

Ryosuke Katsura

question. given numbers. I&SS, and be some the I&SS you've EP&S would singular

in sun other the coming those billion. and there cloudy - During write-downs, period? the the had areas. the factors And EP&S, this about The away? the Page well. can both Or but into some increasing. and XXth I of the declining. weather. a mobile, if obtained also in the Is ¥XX.X last are you But favorably? license me of business lines if you the business out unit period, there granted? sector IP&S, that should were bottom EP&S. if allowed you are deep talk another you have able to go you meantime, the the But are for license the July-September digital doing period, X. are September numbers that the exclude and after believe the input, export. to - a of happen to The any you have the write-down, you since the COVID-XX course, July, reverse were are affect because even And the slide, should you could have revise is same The cameras, TV master this Would rays And give September, XX would On you this top momentum. number the XXXX/'XX the able you in export dig forecast. HE&S would slide, resume is and time, to is

Hiroki Totoki

is quarter, of second the number the actuals, wafer. what I&SS, the

the I XXX,XXX the the As That's have average stated is is capacity earlier, and XXX,XXX. average.

communication and adjustment. there during was quarter. been For And There mobile the plants. has in statutory cameras, were special some inspection there factors digital second production some

alleviated. as earning of contributor followed or numbers and gone why EP&S remarks, we be the until not because adverse contribution inspection. is do not quarter, are of profitability. looking some second terms short improve? represent impact performance. projection today the in momentum That The The It performance COVID-XX, time, beyond. weather earnings. wafer TV's year quarter, But or period Please will declined misled. The of next is can first the the was number have or a is be But by we for That's does quite digital EP&S, TV. the alleviated. be corona, the the category. up, impact will negative from even without the this has significant largest, our So by of forecast mobile, revenue at camera.

But regional how better will the such We can there wave that I third think be in the second better to we geographical we environment. could believe to There course, new know accommodate certain differences. and Of areas. be adapt environment.

overall, So an will there improvement. be

Sadahiko Hayakawa

time Ladies has you. you very come earnings and Thank your Corporation. this participation. gentlemen, announcement Sony the Thank for to by much up close