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

My second question is related to Connected Display again. For Consumer Lifestyle you do expect an 8% to 10% margin for the business overall, which is obviously well above your current profitability. Could you maybe just give us a rough idea about the contribution you expect from the Connected Display segment to the margin target? Would you be happy with breakeven or do you see something closer to 5%?

Pierre-Jean Sivignon - Royal Philips Electronics - CFO

Okay, first question the kind of measures. I think this is not alluding to any extra measures taken that we would not have already announced. So the measures we've taken, we've announced them. And if there are costs coming with them we've told you. I think this sentence is to say that if, and I think Q2 there will be important because I think Q1 is the first quarter we have good news at some places. We have adjustment of inventory in the retail channel [that] other places. I think Q2 will be a good indication if more things need to be done. Right now we don't see it, but this sentence there is to say that if it were to be needed we would need it and we wouldn't wait for too long to make those decision.

Your next question is where is it we can do it? Certainly I think corporate control, basically in terms of costs. Secondly, brand campaign. You saw us already going down from EUR100 million to EUR70 million. And certainly we could take a look as well at research and development.

The fourth element I've looked at or I've touched on earlier on in this conversation would be the discretionary selling expenses which is part of the business model of Consumer Lifestyle. Those are four territories on which we have current plans right now, but certainly that we could take even more drastic measure on an as needed basis.

To your second question which relates to the 8% to 10% guidance for Consumer Lifestyle as part of Vision 2010, no, we're not guiding. I think we are disclosing, as I am sure you will appreciate, Television as part of our numbers on a quarterly basis. We're not planning to guide. Now if you were to ask me what is it that I would wish, I would wish for something in Television which is north of 5%. Yes, I think 5% EBITA for Television would be a good number to be shooting for. But I prefer to give it to you as a wish, not as a guidance. We're not guiding you on Television, we're guiding you on Consumer Lifestyle. But we are disclosing Television though.

Operator Thank you sir. Your next question comes from Mr. Johannes Ries from Cominvest. Please go ahead, sir.

Johannes Ries - Cominvest - Analyst

Yes, okay, this is Johannes Ries, Cominvest. Maybe three clarification questions on your guidance for this year, maybe first on the guidance that Television will be negative for the full year? Is that to my understand it's excluding the restructuring, the EUR125 million you mentioned? Does it also mean that Europe stays negative for the remainder of the year or will it stay negative the whole business because of US?

Second question, your full year guidance that you're operating margin should be above last year, is that how much you have included potential risk from the Healthcare in the US? You mentioned you have to wait till the end of Q2, maybe you have potential risk from the Lighting business in Europe. How much buffers maybe you have built in for this guidance?

And finally on cash flow, will the operative cash flow in the full year above last year's too?


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