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Sony Corporation ADR SNE
Q1 2011 Earnings Call Transcript

Transcript Call Date 04/19/2011

Operator: Welcome to the Sony Ericsson's Media and Analyst Conference Call. To view visual aids for this call please log onto www.sonyericsson.com/press or www.ericsson.com/investor or www.sony.net/ir.

As a reminder, a replay will be available one hour after today's conference. Aldo Liguori from Sony Ericsson will now open the call.

Aldo Liguori - Corporate VP, Corporate Communications: Thank you, operator. Hello, everyone. Welcome to our call today. Effective 1 March, Cathy Davies is the new Corporate Vice President and Head of Global Communications and PR at Sony Ericsson. I will be transitioning out of the Company later this year, and I take the opportunity today to introduce Cathy to you and hand over the reins to her from today. Thank you for your attention over the years, and here's Cathy.

Cathy Davies - Corporate VP, Global Communications and PR: Thank you so much, Aldo. It's my pleasure to serve as your host to these calls from today. With me here in New York are Bert Nordberg, President & CEO of Sony Ericsson; Rikko Sakaguchi, Executive Vice President and Chief Creation Officer; Kristian Tear, Executive Vice President and Head of Sales and Marketing; and Bill Glaser, Chief Financial Officer.

Today, we will be making forward-looking statements during our call. These statements are based on our current expectations and certain planning assumptions, which are subject to risks and uncertainties. The actual results may differ materially due to factors mentioned in today's press release and discussed in this conference call. We encourage you to read about these risks and uncertainties in our financial results announcement.

So, with that out of the way, I should now like to open the call fully and hand over to Bert Nordberg.

Bert Nordberg - President and CEO: Well, good morning and good afternoon to everyone, and welcome to the Sony Ericsson business update for the first quarter of 2011. I'm pleased to report that Sony Ericsson continues to share profitability. Q1 was our fifth consecutive quarter of profitable result. Our shift to Android-based portfolio is driving this continued success.

First, let me share some highlights of the quarter. Our Q1 sales were 1.1 billion euro, income before taxes was 15 million euro. Our average selling price was driven by this Smartphone portfolio and was 141 euro for the quarter and 5% increase year-on-year and 4% increase sequentially. Our gross margin was 33% and we reduced OpEx by 12%.

In Q1, we shipped 8.1 million units, this is due to the decline in the number of shipped mid-tier feature phones to Western Europe, seasonality and the fact that we introduced new products such as the Xperia arc, Xperia PLAY towards the end of the quarter. This had, the Smartphone has been well received by both operators and consumers.

We experienced an operational challenge due to the earthquake and tsunami in Japan. The Smartphone industry relies on Northern Japan as one of the largest producer of components and subcomponents. A number of our suppliers and sub-suppliers are based in the area that was hardest hit.

In Q1 the impact of volume was marginal financially as most of the volume has been secured prior to the earthquake that was actually March 11. However, during Q1 the disaster had both direct and indirect operational impact on our business.

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