Report: Sony facing massive PS3 losses

Darkaber

Darkaber

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Analysts estimate game division could post quarterly loss of $1 billion, according to Bloomberg report.

Sony is expected to report its quarterly earnings tomorrow, and a group of analysts are bracing for bad numbers, according to a Bloomberg.com report. The financial news site obtained predictions of Sony's quarterly results from 11 industry analysts, and the group's median estimates for the electronics giant were a company-wide loss of 75.8 billion yen ($630 million), with revenues up 9.5 percent to 2.02 trillion yen ($16.8 billion).

As for the culprit behind those projected losses, they appear to be due to the game division and then some. Bloomberg said responses from five of the analysts pegged Sony's game group as posting a quarterly loss of 121 billion yen ($1 billion), completely wiping out expected profits from the rest of the company's divisions. The gaming business more than offset gains from Bravia HDTVs and the box office performance of Spider-Man 3, according to the report.
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Link

I think this was to be expected tho but not by that much :eek:
 
I believe Microsoft made similar "losses" in both of its Xbox consoles - especially the first one.

They soon claw it back though in accessories and games and online subscriptions...
 
It's pretty standard to make losses in the early stages of a consoles life.

The idea is to make it all back through software sales.

The Wii being one of the exceptions to this as Nintendo already make a profit on every console sold.
 
We'll have to wait and see, but i think it what everyone had guess would happen. When your losing $200 a console soon adds up, and with the amount of games available its will take a while to make that $200 back. With the news of the console manufacturing cost could drop by $100 as BR diodes manufacturing problems have been partially resolved. Also removing of the EE, and the Cell being manufactured by third parties will help reduce the cost of manufacture.
 
Move along nothing to see here.

IIRC the xbox posted a $5 Billion loss across its whole lifetime. At one point it was $20 Billion down.

1Billion after a year is not too bad. A few good games and everything will be ship shape again. Remember you have to speculate to accumulate.

(But no doubt DD will pop up and say something about how if he was a Sony Share holder he would have preferred they did not waste their money on a games console and gave him a higher dividend payout ;))
 
The shock isn't that the PS3 is losing Sony a lot of money but that the company as a whole is making a loss. Microsoft make a loss on the 360 but their other products more than cushion the blow. Sony and MS are going to lose money for at least another year because of the technology included in their consoles. The Wii is making a profit because its innards are simply refinements of technology that has existed for years now.
 
Isnt the PS2 still selling over 200k a month aswell, also the psp doesnt do to bad, surely that should be helping prop things up.

I am doubting we will see a PS4!

The latest bill of materials i saw for the 360 say they make slight profit on each one sold.
 
Kojak said:
The shock isn't that the PS3 is losing Sony a lot of money but that the company as a whole is making a loss. Microsoft make a loss on the 360 but their other products more than cushion the blow. Sony and MS are going to lose money for at least another year because of the technology included in their consoles. The Wii is making a profit because its innards are simply refinements of technology that has existed for years now.
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Indeed I think people missed that. MS posted losses on its entertainment division ONLY but the company as a whole was still profitable for shareholders. What the above report shows is that the WHOLE company lost money and it (gaming division) wiped out the profits from the actual good stuff they have done.
 
msmalls74 said:
When your losing $200 a console soon adds up, and with the amount of games available its will take a while to make that $200 back.
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Thank goodness for the poor sales ;)

NathenE said:
They soon claw it back though in accessories
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Releasing a 'new' controller would do for a start.

Kronologic said:
(But no doubt DD will pop up and say something about how if he was a Sony Share holder he would have preferred they did not waste their money on a games console and gave him a higher dividend payout )
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I do remember a massive thread about how MS should cut their losses leave the console market because of lack of profit (short term). Will be interesting to see the same peoples opinion now the focus is Sony. My position is the same for both. The potential income from having at least an equal market share in the home console/home media hub area is worth huge intial investment.

My only concern as we pointed out in that thread is MS still made $5b profit despite their xbox losses. Have Sony enough profit elsewhere to subsidise their gaming division for these next couple of years?
 
Bobbler said:
Indeed I think people missed that. MS posted losses on its entertainment division ONLY but the company as a whole was still profitable for shareholders. What the above report shows is that the WHOLE company lost money and it (gaming division) wiped out the profits from the actual good stuff they have done.
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With Spidey 3 is set to make 1 billion dollars (sound like dr evil there), with Pirates 3 out in a week or so and whatever else Sony pictures have for release i dont think they'll make a loss this year. Heres a report from a few weeks back on how bad Sony are doing. From Bloomberg
April 13 (Bloomberg) -- Shares of Sony Corp., the world's second-largest consumer electronics maker, rose to a two-month high after the Nikkei reported operating profit this fiscal year will beat analysts' estimates on Bravia television sales.

The stock gained 2.7 percent to 6,510 yen at the close on the Tokyo Stock Exchange, after rising to a five-year high. Operating profit for the year ending March 31, 2008, will probably reach 400 billion yen ($3.4 billion), exceeding estimates for 350 billion yen, the newspaper said today, without saying where it obtained the information. Chief Executive Officer Howard Stringer targets an operating profit margin of 5 percent by March 2008, about double the current margin. Tokyo-based Sony confirmed today that it will only sell a more expensive version of its PlayStation 3 game console in North America, a strategy it adopted for the European market to bolster margins.

``Profit margin will probably exceed 5 percent if Sony doesn't lower the price of PlayStation 3,'' Hitoshi Kuriyama, an analyst at Merrill Lynch & Co. wrote in a report dated yesterday. He rates the stock a ``buy.''

Shares of Sony gained 28 percent this year, compared with a 0.8 percent advance in the Nikkei 225 Stock Average.
 
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Kronologic said:
1Billion after a year is not too bad. A few good games and everything will be ship shape again. Remember you have to speculate to accumulate.
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That's 1 billion a quarter.
 
Kreeeee said:
That's 1 billion a quarter.
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Ok I misread that (look I'm busy doing course work Ive got a deadline to meet 2 hours 15 min and 25 seconds)

Still its not that bad. They'll make it back in no time. People will be making posts saying PS3 Makes 1Billion 3rd 1/4 profits in no time (well not this year).
 
Thats shocking, I agree that obviously most business plans and consoles work out costing a lot to start with. But the problem above is that no matter how much money the company made through all of its electronic and entertainment media it was all competely wiped out by the losses incurred... I mean, even the ps2 and its games are still selling very well...

That said Microsoft's net profit is far above sony's last I heard, so they would have to pull a major 'PS3' to do this. Will the PS3 doom the PS brand? If the losses are anything to go by they are going to push it 10x harder to claw back the losses, investors would rather go down fighting especially with the strong PS brand name...
 
My brother in law was in the big toy store on sunday. He was tinkering with F1 and the PS3. The salesman tried to get him to buy it as they were 'running out'. He said he was thinking about it but at the minute he had a 360.

To which the salesman replied he had been done, by buying a 360.

I said he shouldve said he sold it to him, but my bro in law aint so quick.

They certainly aint selling fast at the minute and I still don't know anyone with one but I plan to get one myself in the summer if GRAW is confirmed as a dedicated server game.
 
dannyjo22 said:
My brother in law was in the big toy store on sunday. He was tinkering with F1 and the PS3. The salesman tried to get him to buy it as they were 'running out'. He said he was thinking about it but at the minute he had a 360.

To which the salesman replied he had been done, by buying a 360.

I said he shouldve said he sold it to him, but my bro in law aint so quick.

They certainly aint selling fast at the minute and I still don't know anyone with one but I plan to get one myself in the summer if GRAW is confirmed as a dedicated server game.
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Haha - salesmen are apalling sometimes. The worst part is that the majority will say anything to make a sale and actually know squat about the products.
 
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