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Apr. 14. 2008 / 4:00AM, PHG - Q1 2008 Royal Philips Electronics Earnings Conference Call

Pierre-Jean Sivignon - Royal Philips Electronics - CFO

I think if you go back, because those questions really came hard on the table at the end of last year. What we said last year is that we would take decisive actions. We made those statements in mid-January, they were included in our management agenda. And you can see that literally weeks later we came up with a deal which is a deal which essentially by Q3 the business of North America will be a loss-making business, will be replaced by a business which will be generating some royalties for us.

Now as far as the rest of the portfolio is concerned we will continue, as we've done in the past, to improve it. We'll continue relentlessly to manage a net operating capital, we will continue to update the value chain, which is why we've decided to take extra measures. There is no decision made a la Funai for the rest of the portfolio; there the brand is much stronger; the market shares are stronger.

But we've said, as well, that as portfolio managers we, in principle, keep all options open. That's what Gerard Kleisterlee said at the end of Q4. So the options are open, but there is no plan right now to basically do Funai type of deal in the rest of the Connected Display portfolio.

Olubunmi Asaolu - Lehman Brothers - Analyst

Thanks, understood. And then quickly a follow-up on your cash return to shareholders. Should we expect you to basically complete all of the ongoing buyback in 2008, or will there be some left over for 2009?

Pierre-Jean Sivignon - Royal Philips Electronics - CFO

Well I think I will totally stick to what we said at the end of Q4. I think we would like the vast majority of it to be done in '08. Of course parameters are the stock price and right now certainly, the current stock price gives ample reason to do it in '08. And if you look -- by the way, we were at EUR1 billion more or less at the end of Q1, and if you look at the extra buybacks which have been done in the last two weeks, you will see that we are almost now at the mode where we are on the quasi EUR5 billion trend for the year. So you could say that right now we are on that trend.

Operator Thank you. Your next question comes from Mr. Francois Meunier from Cazenove. Please go ahead sir.

Francois Meunier - Cazenove - Analyst

Hello yes, it's Francois at Cazenove. Just a quick question about inventories in TVs again. Could you please explain what happened in Q1 and when you think inventories should be at a better level, and if you will have to take a charge before transfer to Funai related to those, what appears to be excess inventories in the retail or in your own inventories?

Pierre-Jean Sivignon - Royal Philips Electronics - CFO

Yes, I think the inventory was high all over really. There was high inventory, or higher inventory in North America, and there we might, as part of the 50% of the cost which relates to the Funai transaction some of those, some of that money is on the expected, indeed, provision we might have to take; your question is well taken on the inventory we transferred to Funai. As far as now, so that's a fair point, so some of that money might go there, not of use yet because you realize that we've just signed the pre-agreement with Funai and we will finalize between now and September 1 the details. So it's a bit early to tell how much inventory we might have to write-off there.


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