Sony Projecting Big Fiscal Year Loss

[Nitey]

[For those interested]
Yearly losses now forecast at $1.2 billion.

Nintendo isn't the only company losing money. According to the AP, Sony is struggling, too. While Nintendo lost $924 million last quarter to Sony's more manageable $346 million loss, Sony has readjusted its fiscal year earnings to show a dramatic loss of funds. Originally projecting a yearly loss of $769 million, Sony is now forecasting losses of $1.2 billion.

According to the AP, this will mark the fourth straight year of Sony being in the red, though this is attributed to two major factors: poor television sales, and the same problem that ails fellow Japanese company Nintendo; the unusually strong nature of the Yen versus foreign currency, which makes overseas purchasing of Japanese products worth less. "A strong Yen erodes the value of Sony's overseas earnings," the article notes.

Kaz Hirai, Executive Deputy President of Sony, said that "management is feeling a serious sense of crisis about the seven years of losses," continuing that he "promise[s] to lead the turnaround to get [Sony] out of the red."

The article doesn't speak much to the PlayStation brand in particular under the Sony umbrella, only stating that the PlayStation Vita is being primed to be released in the coming months.

Source

They need to get rid of that failing TV business. Lost count of how many years it's caused nothing but trouble, lol. They are restructuring it yes but it really is digging in deep

*pats 40" 2010 bravia*

The yen is fucking up a lot of Japanese businesses right now
Anyway, hope the Vita is a huge success for Sony, they kinda need it to be, in a financial sense

[Fenix]

They need to find out which TVs are not selling much and off those lines.

..then do a big price cut so I can get a better TV at a great price

[AaronSOLDIER]

Their TV prices are too high and theres next to no marketing for any Sony products.

[daLa]

Isn't this also because of the whole DDoS deal with PSN?

[acryllicaltair]

their TV business struggles because they are overpriced when people can get products that can do just as well for cheaper. i know of one friend that owns a bravia. everyone else is on a samsung or LG TV set on toshiba.

[mynd]

Err, the division with the PS3 (and TV) made $449 million loss attributted to the LCD busniess restructure and...

Operating loss of 34.6 billion yen (449 million U.S. dollars) was recorded compared to income of 1.0 billion yen
in the same quarter of the previous fiscal year. This was primarily due to deterioration in the cost of sales ratio
and a decrease in gross profit due to lower sales, partially offset by a decrease in restructuring charges. Categories
contributing to the deterioration in operating results (excluding restructuring charges) include LCD televisions,
reflecting a decline in unit selling prices that exceeded cost and expense reductions, the game business and PCs,
reflecting lower sales as noted above.

I know Sony have said the PS3 is break even. But clearly its not if they are attirbuting loss's to it.

[AaronSOLDIER]

Isn't this also because of the whole DDoS deal with PSN?

Sony didn't really lose money over that, the freebies they offered were titles they'd already broken even off. Its mainly due to the Yen like how Nintendo posted their first loss in almost 30 years.

[Thorzilla]

Sony didn't really lose money over that, the freebies they offered were titles they'd already broken even off. Its mainly due to the Yen like how Nintendo posted their first loss in almost 30 years.

I think he meant research and money they had to spend to undo the mess, plus the money that they probably had to spend to hire that identity theft security company and whatnot.

[CathleenTefft]

They need to find out

[RobbySkateboard]

I have nothing important to add but I need 5 posts before I can make a topic to ask me question so: that sucks for sony, better luck next year

[Wasib]

The appreciation of the YEN is having a big impact (out of the control of Sony management) but without doubt the main concern right now is with the TV business just dragging down earnings.

The PlayStation division has posted profits and in some quarters large ones in the past (talking about the PS3 era here not PS1/PS2) but recently it was lumped into a massive division (Consumer Products and Services) selling all-sorts of Sony products and now we do not really know financially where the PlayStation division stands which is a real shame. It could be a loss or profit.

Recently it was profit and hardware/software/accessory sales continue to increase for the PS3 but decline for the PS2/PSP. That is all we know really. And that is a trend that should continue for some years. When Vita arrives its hardware/software/accessory sales will have to be taken into consideration.

What is known in the that the Consumer Products and Services division contains a lot of Sony items - which shows the TV business must be in a terrible state to be acting as such a drag on earnings (taking out the YEN factor). Indeed the TV business of Sony has not made a profit for the last 8 years! Clearly things will have to change - why it took this long to figure out though needs to be seriously questioned.

[mynd]

The appreciation of the YEN is having a big impact (out of the control of Sony management) but without doubt the main concern right now is with the TV business just dragging down earnings.

The PlayStation division has posted profits and in some quarters large ones in the past (talking about the PS3 era here not PS1/PS2) but recently it was lumped into a massive division (Consumer Products and Services) selling all-sorts of Sony products and now we do not really know financially where the PlayStation division stands which is a real shame. It could be a loss or profit.

Recently it was profit and hardware/software/accessory sales continue to increase for the PS3 but decline for the PS2/PSP. That is all we know really. And that is a trend that should continue for some years. When Vita arrives its hardware/software/accessory sales will have to be taken into consideration.

What is known in the that the Consumer Products and Services division contains a lot of Sony items - which shows the TV business must be in a terrible state to be acting as such a drag on earnings (taking out the YEN factor). Indeed the TV business of Sony has not made a profit for the last 8 years! Clearly things will have to change - why it took this long to figure out though needs to be seriously questioned.

They have stated that the PS3 price cut contributed to the loss.

Categories contributing to the deterioration in operating results (excluding restructuring charges) include LCD televisions,
reflecting a decline in unit selling prices that exceeded cost and expense reductions, the game business and PCs,
reflecting lower sales as noted above.

So Sony deem it more important to gain sales than profits this generation.
I am beginning to think their stuuborn pride is more of the reason than anything else.

[acryllicaltair]

said it before, will say it again. Sony needed to have chased profitability, with every loss they make, their cash reserves take a hit, paying back their debt a bit harder, and it might also stifle or limit what they invest in new products in terms of R&D..........this isnt a company as cash rich as MS or Apple, they no longer have a killer product that rules its competitors.

[Wasib]

They have stated that the PS3 price cut contributed to the loss.



So Sony deem it more important to gain sales than profits this generation.
I am beginning to think their stuuborn pride is more of the reason than anything else.

Sure it did but the main point is that it is the YEN and TV operations which are acting as the major drag on Sony's earnings. One is out of Managements control though (exchange rate). It is the TV side which needs to really be looked at and quickly to be honest. It is and has been in a terrible state for years.

I am not sure how you drew the conclusion Sony deem it more important to gain sales than profits this generation. Remember the logic is to reduce the per-unit profit per unit sold but make it up on additional software and accessory sales. So Sony's decision to cut the price could in the end result in higher profit (i.e. the extra gains from software and accessory sales make up for the loss in revenue from the price-cut).

We won't know until Sony has showed us the Q3 and Q4 reports.

In the latest Q2 report software sales were on the rise despite only a months worth of the PS3 price-cut and possible fall-out from the PSN hack scandal as well as issue the PS3 is now not piracy proof. So again we won't really know until the Q3 and Q4 reports.

Even then it will be hard to say anything definite. For instance even if hardware/software sales are up we won't know whether that in money terms made up for the price-cut.

What is possibly logical is that Sony looked at the loss/profit issue hard before implementing this price-cut - particularly knowing the dire financial state they are in. It would thus surprise me for them, in their present dire financial state, to have made moves to further contribute to that.

said it before, will say it again. Sony needed to have chased profitability, with every loss they make, their cash reserves take a hit, paying back their debt a bit harder, and it might also stifle or limit what they invest in new products in terms of R&D..........this isnt a company as cash rich as MS or Apple, they no longer have a killer product that rules its competitors.

Again see my above argument for the rationale behind a price-cut.

But there is no doubt Sony are indeed in a dire financial situation. Things really need to be improved fast.

[The Black Wolf]

Aw man, I just hope Sony doesn't go bankrupt.

[ddPLaNeT]

Didn't Sony just buy Sony-Ericsson for 1.5 billion ?

That may have contributed to the losses... anyway, shame their tvs are priced too high, i have a 46" Sony Bravia at home and it's the best tv i've ever had. They make the best tvs imo, they're a little over priced though...

[Sub-stance1]

Sony has been taking losses for a while now.

[AaronSOLDIER]

Aw man, I just hope Sony doesn't go bankrupt.

Not any time soon. Pretty sure they'll be fine.

[Jo-san]

Aw man, I just hope Sony doesn't go bankrupt.

I think the likelihood of Sony failing in the next quarter or two is unlikely; however the business is being hammered on multiple fronts. On-going poor financial performance, reduced market share, low margin/loss-making products, currency fluctuations, and other factors are crippling the business.

Last Friday, S&P put Sony's long-term corporate credit rating under review for a further downgrade, while Sony is trading at their lowest in twenty four years (Sony shares down 50% this year, relative to a 14% decline in the NIKKEI 225). Without the consistent positive performance from the Music, Pictures & Financial Services divisions, Sony would be toast. Meanwhile the Sony Ericsson position is a mistake and will place further onerous conditions on the group.

The potential credit downgrade is the biggest concern however, because for a debt-laden business such as Sony that means it will push up already significant risk costs to roll-over/accumulate debt to service its operations which will constrain the company’s' ability to allocate funds to the likes of R&D.

The ongoing crisis in Europe will I believe ultimately be the key indicator as to Sony’s future viability; a major continent-wide recession will cripple the global economy and push multiple consumer-focused entities who limped through the previous recession over the edge.

[acryllicaltair]

Sure it did but the main point is that it is the YEN and TV operations which are acting as the major drag on Sony's earnings. One is out of Managements control though (exchange rate). It is the TV side which needs to really be looked at and quickly to be honest. It is and has been in a terrible state for years.

I am not sure how you drew the conclusion Sony deem it more important to gain sales than profits this generation. Remember the logic is to reduce the per-unit profit per unit sold but make it up on additional software and accessory sales. So Sony's decision to cut the price could in the end result in higher profit (i.e. the extra gains from software and accessory sales make up for the loss in revenue from the price-cut).

We won't know until Sony has showed us the Q3 and Q4 reports.

In the latest Q2 report software sales were on the rise despite only a months worth of the PS3 price-cut and possible fall-out from the PSN hack scandal as well as issue the PS3 is now not piracy proof. So again we won't really know until the Q3 and Q4 reports.

Even then it will be hard to say anything definite. For instance even if hardware/software sales are up we won't know whether that in money terms made up for the price-cut.

What is possibly logical is that Sony looked at the loss/profit issue hard before implementing this price-cut - particularly knowing the dire financial state they are in. It would thus surprise me for them, in their present dire financial state, to have made moves to further contribute to that.



Again see my above argument for the rationale behind a price-cut.

But there is no doubt Sony are indeed in a dire financial situation. Things really need to be improved fast.

Sony themselves went on to say that one of the factors that will contribute to the loss is the price cut on the console.

That said, i honestly think that they need to forget about marketshare, and start focussing on profitability. Profits put you in a better position, losses do the opposite for you as a business.

[Nitey]

Sony Investing in a 'Different Kind of TV Set'
Sir Howard Stringer comments on new HDTV initiative.

Critically acclaimed as they may be, Sony’s range of HDTVs are apparently far from profitable, or so said Sony CEO Sir Howard Stringer in an interview with The Wall Street Journal.

According to Stringer, the company is losing money on every set it makes, and in an attempt to salvage its hemorrhaging HDTV arm, is investing considerable R&D capital in a "different kind of TV set."

Naturally, Stringer would not specify what new or existing technology this new initiative might entail, but if we'd bet on the world getting a glimpse of them at Consumer Electronics Show in January.

He went on to discuss Sony's larger electronics ecosystem, and says that the company is focusing on four main categories: tablets, PCs, smartphones, and TVs. The company recently acquired its subsidiary, Sony Ericsson, in an effort to unify development and cross-integration between product types and compete with companies like Google and Apple.

"I've spent the last five years building a platform so I can compete against Steve Jobs," Stringer said. "It's finished, and it's launching now."

Source

[AaronSOLDIER]

They're losing money despite having the most expensive sets on the shelves?

[Jo-san]

They're losing money despite having the most expensive sets on the shelves?

Just because the retail price for a unit is high, it doesn't mean that the margins are chunky. Approaching nearly a decade of year-on-year losses is the result of poor management, expensive components, poor strategy and questionable marketing. If Apple (as rumoured) start manufacturing TV's, I can't see Sony competing in the same environment.

[ddPLaNeT]

Selling TVs isn't a big money maker for any company anyway, way too much competition... if Sony leaves the TV business, wich they will probably never will as they manifacture many parts for other big companies, they still wouldn't lose all that much.
Where Sony makes money is in licensing their tech to other companies, like the cameras on iPhones are made by Sony, music licensing, movies...

If Apple starts selling tvs on the other hand, wich i really really doubt unless they integrate them with their eco system, they will be as expensive as Sony tvs or more...

[D3seeker]

As many times as they say loss you'd think theyd be out of business