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To Our Shareholders - November 2015

Consolidated Financial Results in the first half of FY 2015

In the first half of FY 2015 (from April 1, 2015 to September 30, 2015), sales and operating revenue ("sales") were 3,700.8 billion yen, essentially flat compared to the same period of the previous fiscal year ("year-on-year"). This was primarily due to the significant decrease in sales in the Mobile Communications ("MC") segment, offset by the significant increase in sales in the Game & Network Services ("G&NS") and Devices segments, and the impact of foreign exchange rates. In the MC segment, sales decreased primarily due to a significant decrease in smartphone unit sales resulting from a strategic decision not to pursue scale in order to improve profitability. In the G&NS and Devices segments, sales increased significantly primarily due to the contribution of PlayStation®4 software sales and an increase in sales of image sensors for mobile devices, respectively.

Operating income of 184.9 billion yen was recorded, compared to an operating loss of 15.8 billion yen in the same period of the previous fiscal year. This improvement was primarily due to the impairment of goodwill of 176.0 billion yen recorded in the MC segment in the same period of the previous fiscal year, as well as the improvement in the operating results of each segment excluding the Pictures and Financial Services segments. Net income attributable to Sony Corporation's stockholders of 116.0 billion yen was recorded in the first half of FY 2015, compared to a loss of 109.2 billion yen in the same period of the previous fiscal year.

For the FY 2015 interim dividend, Sony has determined to pay 10 yen per share in light of the consolidated financial results for the first half of the current fiscal year and the forecast for consolidated financial results for the full fiscal year.

Consolidated Financial Results in the first half of FY 2015


The Second Mid-range Plan (FY 2015 - FY 2017)
In the first mid-range plan (FY 2012 - FY 2014), we addressed our most pressing issue: the revitalization of our electronics business. In FY 2014, the final year of the first mid-range plan, we resolved to deal with difficult problems, not put them off until later, and implemented structural reforms. As a result, in areas other than the smartphone business we have completed large-scale restructuring efforts in our businesses where we have faced challenges. From this fiscal year, we began our second mid-range plan spanning the three years to FY 2017. In this second mid-range plan, we are drastically changing our course from the previous restructuring phase to a new growth phase. The following points are our key strategies for achieving our transformation into a highly profitable enterprise during our second mid-range plan.

  • Business management that emphasizes profitability, without necessarily pursuing volume
  • Business management that grants each business unit greater autonomy and mandates a focus on shareholder value
  • Clearly defined positioning of each business within a broader business portfolio perspective

We have set return on equity ("ROE"), and operating profit as the key performance indicators for management in this mid-range plan. For fiscal year 2017, the final fiscal year covered in this mid-range plan, we aim to achieve an ROE of 10%+ and operating profit of more than 500 billion yen.

Sony is engaged in a diverse range of businesses and the competitive landscape, market growth potential, and competitive edge of each business is not the same across our businesses. In order to clarify what we will prioritize when managing each of these businesses, we have classified each one as either a "Growth driver," "Stable profit generator," or "Area focusing on volatility management." We have assigned a target for Return on Invested Capital to each business unit, which is coupled with the Group's target ROE and we will manage each business with an emphasis on profitability.
  • Positioning of each business of our business portfolio
Aggressive Investment
  • Stacked CMOS Image Sensor
We have defined FY 2015, the first year of Sony's profit generation phase, as a year of aggressive investment mainly in our growth driver businesses. In July 2015, we procured a total of approximately 420 billion yen through an offering of common shares and convertible bonds. We plan to use these funds mainly for increasing the production capacity of, and research and development for, stacked CMOS image sensors in the Devices segment.

Sony's CMOS image sensors are leading the market and have a high market share thanks to our advanced technology, which we feel gives us a several-year lead over our competitors. We are aiming to solidify our strong position through these investments.
Responding to Changes in the Business Environment

In the second mid-range plan, we announced that we would move to eventually split out all of the business units which had been housed within Sony Corporation. Based on this policy, Sony Video & Sound Products Corporation, a new subsidiary housing Sony's Video and Sound business, started operations in October 2015. We have also announced that Sony's semiconductor business would be split out into a new subsidiary, Sony Semiconductor Solutions Corporation, which will aim to commerce operations on April 1, 2016.

We are splitting out our business in order to facilitate autonomy and boost the competitive strength of each of our different business units. As the business environment rapidly changes, we hope that these initiatives will promote clear accountability and accelerate decision-making, thereby helping us achieve our goal of building a sustainable profit-generating organization. As we go forward with these initiatives, we will promote balance between the centrifugal force that comes from splitting out businesses and the centripetal force that comes from the Sony Group and the One Sony initiative.
New Business Creation

Inside Sony, we are working to support and cultivate the creation of new products and businesses beyond the boundaries of our existing business areas to keep delivering kando to customers through innovation. The Sony Seed Acceleration Program, run by the New Business Creation Department, was founded in April 2014 and supports the rapid creation of new businesses utilizing the imagination of Sony's employees through product auditions and original training programs. We already have products which are currently on sale and many other products we are working on for future launches.

A product created by the Sony Seed Acceleration Program internal audition program

wena™ wrist, a wristwatch whose band uniquely integrates digital technologies

Keeping the design and atmosphere of a traditional timepiece, this watch includes three digital functions in its band; a mobile wallet made possible through FeliCa contactless IC card technology, phone and e-mail notifications, and a logging function to record activities such as how many steps you walk.
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