China Digital TV's CEO Management Discuss Q2 2012 Results - Earnings Call Transcript

Further information regarding these and other risks and uncertainties is included in our registration statement on Form 20-F and other documents filed with the U.S. Securities and Exchange Commission. China Digital TV does not assume any obligation to update any forward-looking statements except as required under applicable law.

As a reminder, this conference is being recorded. In addition, a webcast of this conference call will be available on China Digital TV’s investor relations website. I will now turn the call over to China Digital TV’s president, Mr. Li.



Dong Li

Thank you, Josh. Hello everyone and welcome.

I’d like to begin by sharing some updates on recent trends in China’s cable market. As cable network consolidation continues to move toward completion, we are seeing purchasing decisions increasingly being centralized at the provincial, rather than sub-provincial, level. As a result of this change, during the second quarter, we experienced some industry headwinds, primarily due to delayed purchases from a few provinces. However, we believe that the unmet demand for smart cards in these provinces will be fulfilled at a later stage.

In the second quarter, our shipment volumes were impacted by the industry-wide purchasing delays that I just mentioned. During Q2, smart card shipments were 3.74 million, compared with 4.64 million in the same period in 2011 and 3.70 million in the first quarter of 2012. During the second quarter, average selling price, or ASP, for smart cards decreased by 5.4% compared to Q1 2012. We maintain our expectation that ASP on an annual basis will be 5 to 8 percent lower this year compared with last year. In addition, the unit cost for smart cards decreased by 4.1% compared to the first quarter of 2012.

Despite industry headwinds in the second quarter, we remain confident in the long-term growth drivers of China’s cable sector. There are several trends that we believe give us reason to be optimistic about the sector going forward.

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