This summary is based on the third quarter fiscal 2007 earnings call conducted by Sony Corporation (SNE: chart) on January 31, 2007.

Management:

EVP and CFO: Nobuyuki Oneda
Group Executive, Sony Corporation; and EVP and CFO, Sony Corp. of America: Robert Wiesenthal
IR Contact: Sam Levenson

Key Investors Issues

- Consolidated sales increased by 10% year-on-year to 2.859 trillion yen.
- Equity and net income of affiliated companies increased by 9% year-on-year to 46.9 billion yen.
- Consolidated operating income increased by 6% to 189.4 billion yen.

Third Quarter Highlights

Consolidated sales increased by 10% year-on-year to 2.859 trillion yen.

- Consolidated operating income increased by 6% to 189.4 billion yen, largely due to the improvement in the Game segment.
- Other income and expenses improved 98.2 billion yen. This was mainly due to the recording of a gain of 81 billion yen from the global IPO of Sony Financials Holdings.

Equity and net income of affiliated companies increased by 9% year-on-year to 46.9 billion yen.

The contributions of the major affiliates are as follows. Sony Ericsson contributed 30.4 billion yen, Sony BMG contributed 11.5 billion yen, and joint venture with Samsung, S-LCD, contributed 3.1 billion yen. As a result of these factors, net income increased by 25% to 200.2 billion yen.

Sales in Electronics segment increased by 10%.

- Sales to outside customers increased by 14%. By product, BRAVIA LCD TVs, VAIO PCs, and Cyber-shot Digital Cameras contributed to the sales increase. On the other hand, LCD rear-projection televisions, which suffered from a shrinking market, had a decrease in sales.
- Operating income in Electronics segment was the second highest quarter on record, a decline to 7% from last year''s record quarter. While sales increase in this segment enjoyed a positive impact from the depreciation of the yen against euro, price declines exceeded cost improvements. The products, which generated the largest amount profit, were digital cameras, video cameras, PCs, disk manufacturing, and broadcast and professional equipment.

- Overall sales of the television category were approximately 508 billion yen, an increase of 20% year-on-year. Operating income was approximately 4 billion yen down 9 billion yen from last year. Due to the shrinkage of the market for LCD rear-projection TVs, the company has decided to exit that business around March of this year and will focus on the fast growing LCD TV and OLED TV businesses.
- In the Semiconductor category, sales were approximately 231 billion yen, a decrease of 9%.
- Operating income was approximately breakeven, down 13 billion yen from last year. Profit decreased because of decreased system LSI sales as well as bringing forward from the fourth quarter to the third quarter certain one-time charges.

Sony Ericsson posted an 18% year-on-year increase in unit sales to 30.8 million units.

- Sony Ericsson continues outpace industry growth, and during calendar 2007 they grew market share around 2 percentage points to reach over 9% market share for the full year. They continue to pursue their goal of being one of the top three players in the industry.
- As a result of strategically increasing the proportion of lower priced handsets, revenue was relatively unchanged at 3.771 billion euros.

- Income before income taxes was also relatively unchanged at 501 million euro.
- Walkman and Cyber-shot phones continued to contribute to the results.
- The equity and net income recognized by Sony was 30.4 billion yen.

In the Game segment, sales increased 31%.

Approximately three quarters of sales came from hardware and accessories and the rest from software. Overall, hardware sales increased due to the contribution from PS3.

PS2 has reached its eighth year-end selling season, and although unit sales decreased year-on-year, PS2 sale continued to exceed the previous year in Eastern Europe, Middle East, and Asia, and the company expects the console to continue to contribute to business. As a result of the strength in the PS2 business, the company is revising unit forecast upward for the second time this year, and expects to sell 13 million units during the current fiscal year. This compares with initial forecast of 10 million units and more recent forecast of 12 million units.

PSP hardware unit sales increased year-on-year. The console gained popularity among a wide user base after the introduction of the new model, expansion of the software offering, and an enhancement of the mobile entertainment experience through the addition of features such as TV viewing. Having reached a record for year-end selling season sales, the company will further expand the software offering and features and services associated with the device accelerating expansion of the platform. As a result of the strength in the PSP business, the company is revising PSP unit forecast upward for the second time this year, and expects to sell 13 million units during the current fiscal year. This compares with initial forecast of 9 million units and more recent forecast of 10 million units.

- After the introduction of a new model and the reduction in sales price last fall, the expansion of the PS3 platform reached a new level as sales increased significantly. The world of PS3 entertainment is expanding as the cumulative number of disc based software titles released for PS3 at the end of December exceeded 250, and as a wide variety of downloadable titles has also been distributed. The company has revised downward fiscal year unit sales forecast from 11 million units to 9.5 million units.
- Although PS2 and PS3 software sales declined due to a decrease in units, overall software sales for the segment increased due to contributions from PS3.