China Digital TV Holding Co., Ltd. ( STV)

Q2 2011 Earnings Call

August 15, 2011 8:00 PM ET

Executives

Dong Li – President and Chief Marketing Officer

Nan Hao – Senior Supervisor, IR

Analysts

Mike Olson – Piper Jaffray

Philip Wan – Morgan Stanley

Questio n -and - Answer Session

Operator: (Operator Instructions). Our first question comes from Mike Olson with Piper Jaffray. Please proceed.

Mike Olson – Piper Jaffray

Hey, good morning. I just had one quick question for you regarding gross margin, gross margin was definitely up more than we expected on a year-over-year basis in the June quarter. Do you believe gross margin is going to remain in that kind of below 80% range in the second half of 2011 or should we expect it to be more in the high 70s? Thanks.

Dong Li

(Foreign Language - Chinese)

Nan Hao

Hi Mike. The impact of the gross margin caused from the two reasons. The first reason was the phase ASP from the (inaudible) cards. Actually the ASP from this quarter compared to the last quarter has remained almost the same in U.S. dollars and the other reason caused the gross margin increase was the unit cost of these cards. The unit cost of the cards this quarter was $0.18 and compared to the last quarter we have 8% decrease of the unit cost and for the average selling price we will remain stable at 5% increase within this year. So this is still future of – this is the trend of our gross margin.

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