Bloomberg: Sony profits could fall 50 percent

[Spartan_X]

Bloomberg: Sony profits could fall 50 percent

The electronics giant's third-quarter results likely to plummet as a result of losing market share to Nintendo.

Sony's third-quarter financial earnings results, which are scheduled to be released tomorrow, could be down more than 50 percent from the same period the previous year, reports Bloomberg.

The financial news service surveyed five analysts on Sony's upcoming results, and the median estimate weighed in at 84.1 billion yen (approx $680 million), dramatically short of last year's third-quarter earnings of 168.9 billion yen ($1.38 billion).

Sony CEO Howard Stringer has "failed to fend off Nintendo," the report continues, with the Wii outselling the PS3 two-to-one worldwide.

The company is likely to lose a record 191.9 billion yen ($1.57 billion) from games this fiscal year, compared with a profit of 8.7 billion yen ($71 million) last year, according to the survey.

In October, Sony cut its fiscal-year profit forecast to 80 billion yen ($656 million), a five-year low. Shares in Sony recently jumped 6 percent, the biggest single increase in more than a year.

By Staff -- GameSpot

Posted Jan 29, 2007 6:37 am CT

Story from GameSpot: http://www.gamespot.com/news/6164899.html

Copyright ?2006 CNET Networks, Inc. All Rights Reserved.

[stanley porkchop]

If anything, it's nice to dream :rofl:

[User6060]

Oh noes, Sony watch your backs and your banks

[bob_c_b]

Bloomberg is usually wrong on just about everything, from Apple to Microsoft to Sony. If you really analyze what this "report" is saying it doesn't make much sense. I don't even have a PS3 and I find this article biased.

[The Teej]

2 to 1? I thought the sales were roughly 4 million Wiis to 1 Million PS3s?

[Rodrigo]

Bloomberg is usually wrong on just about everything, from Apple to Microsoft to Sony. If you really analyze what this "report" is saying it doesn't make much sense. I don't even have a PS3 and I find this article biased.

Which part exactly doesn't make sense and which part is biased? The Wii actually outsold the PS3 by much more than two to one.

[bob_c_b]

Which part exactly doesn't make sense and which part is biased? The Wii actually outsold the PS3 by much more than two to one.

One product selling more than another does not necessarily mean profits will be grossly off, especially when supply of one product is grossly constrained. I'm not questioning if the Wii outsold the PS3, clearly it did, but if that has any impact on Sony's predicted numbers. I'm not so much defending Sony as taking issue with the faulty logic...

EDIT: looks like final numbers are in at a 5.3% drop, hardly the end of the world during a product launch and IIRC the same kind of drop the MS Games unit suffered during the 360s launch.

http://newsvote.bbc.co.uk/1/hi/business/6312179.stm

Why is everyone so eager to call the PS3 dead? I know Sony is the new "evil empire" but the PS3 has barely been on shelves for 90 days, far too early to declare failure yet.

Edited January 30, 2007 by bob_c_b

[AlphaPrime]

Wow, they were way off with this one. Only 5% drop compared to their 50%. Anyone else getting sick of analysts?

[bob_c_b]

Wow, they were way off with this one. Only 5% drop compared to their 50%. Anyone else getting sick of analysts?

Yea, long ago, they are not held accountable for the trouble they often cause and people take their "guidance" as gospel far too often.

[Dick Montage]

Analysts can be used to shape an industry now rather than predict it. Their "predictions" can shape the trends, which is wrong!

[bob_c_b]

Analysts can be used to shape an industry now rather than predict it. Their "predictions" can shape the trends, which is wrong!

Well said, and we have all seen some of the big players try and use this in their favor.

[Ironman273]

Sony steps from the shadow of Playstation

Posted Jan 30th 2007 9:46AM by Douglas McIntyre

Sony Corp.'s (NYSE:SNE) quarterly results had one overwhelming message. Consumer electronics and handsets are the future of the company. Playstation is moving toward the background.

Sony's operating profit dropped 15% [subscription required] to $1.5 billion, but revenue was up 9.8%. The company said start-up costs and margin pressures from Playstation 3 hurt results but sales of LCD TVs did well as did the company's handset joint-venture with Ericsson (NASDAQ:ERIC).

Sony raised its forecast modestly for the March 07 quarter.

A closer look at Sony's results shows that electronics operating income rose by 103% to $1.5 billion, equivalent to the operating profit for the entire company. But, the game business had an operating loss of $455 million.

Sony Pictures posted an operating profit of $220 million compared to a loss in the same period a year ago. The film "Talladega Nights" drove much of the improvement. Operating income at Sony Financial Services was down 46% to $214 million.

For the time being, the Playstation does not matter much to Sony. If consumer electronics can continue to be successful for the company, the key is for the PS3 not to lose too much. Sony might be better off without it.

Source

This has a little more information and breaks it out some by divisions.

As to why people are saying the PS3 is dead, my opinion is that normally when a product launches the demand is high for a longer period of time than what has been seen for the PS3. Bulkstacks of PS3s in virtually every store so soon is not a good sign since it means that, while the retailers did order all the product available (since I'm sure they expected PS2-type sales), consumers are not stepping up to the plate to buy it. The PS3 as it stands now is a product failure. That doesn't mean they can't turn it around. Good games, price cuts, some sort of "killer app" can definitely bring the PS3 back in the game. The down side is that while consumers (and developers for that matter) wait for that to happen they may find the 360 or Wii work just as well for them.

[bob_c_b]

Source

This has a little more information and breaks it out some by divisions.

Bulkstacks of PS3s in virtually every store so soon is not a good sign

This doesn't really mean anything as no one really knows how often those stacks are replenished, I see many stacks of 360s and did about the same period of time after launch, on hand inventory hardly indicates a failure. And I can't speak for anyone else, but I have yet to see a boxed PS3 at any local retailer in my area lately, I keep hearing about these stacks but my area BestBuy, CompUSA and Circuit City stores have none on hand when I walk in? For that matter they don't have tons of 360s and I have never seen a boxed Wii. Truth is that seeing inventory in a store is nothing more than anecdotal evidence at best.

[FreqFace]

This doesn't really mean anything as no one really knows how often those stacks are replenished, I see many stacks of 360s and did about the same period of time after launch, on hand inventory hardly indicates a failure. And I can't speak for anyone else, but I have yet to see a boxed PS3 at any local retailer in my area lately, I keep hearing about these stacks but my area BestBuy, CompUSA and Circuit City stores have none on hand when I walk in? For that matter they don't have tons of 360s and I have never seen a boxed Wii. Truth is that seeing inventory in a store is nothing more than anecdotal evidence at best.

What about the sales figures? What about the reports of employees themselves stating that they aren't shifting?

[Rodrigo]

What about the sales figures? What about the reports of employees themselves stating that they aren't shifting?

Exactly. But people wants to believe otherwise.

[bob_c_b]

1. Places like BestBuy and Circuit City are staffed by slackers and idiots so I don't put much stock in that.

2. Let's have a peek at NPD over the next 6 months, that will be the real indication.

3. At that price point only the hardcore are shopping for PS3s now.

I don't much see why so many people are so vested in seeing the PS3 die.

I don't even own a PS3 and I fine a lot of these comments suspect.

[Joel]

1. Places like BestBuy and Circuit City are staffed by slackers and idiots so I don't put much stock in that.

2. Let's have a peek at NPD over the next 6 months, that will be the real indication.

3. At that price point only the hardcore are shopping for PS3s now.

I don't much see why so many people are so vested in seeing the PS3 die.

I don't even own a PS3 and I fine a lot of these comments suspect.

So all the sites that track sales and place the ratio at least at 3:1 Wii to PS3 AND all employee reports of non-moving stock, from many types of stores are ALL wrong?

[TokyoKiller]

As we've all predicted before the launch, Sony was shooting themselves in the foot with the Playstation 3. I don't know why, but I had a strong feeling that even before Sony announced the price and how the Playstation 3 will be like that we will not see Playstation as a brand the leader of the gaming industry and at one point I even thought we'll never see a Playstation 3, which was almost there considering their problems with Blu-Ray diode shortages.

I don't want to call it Deja-Vu but that was me back in 2004...

[Ironman273]

1. Places like BestBuy and Circuit City are staffed by slackers and idiots so I don't put much stock in that.

2. Let's have a peek at NPD over the next 6 months, that will be the real indication.

3. At that price point only the hardcore are shopping for PS3s now.

I don't much see why so many people are so vested in seeing the PS3 die.

I don't even own a PS3 and I fine a lot of these comments suspect.

As has been pointed out, all the information comes in quantities and from various different sources. You obviously refuse to believe the reports and will pick and choose what you want to believe that makes you feel better.

There really is no one "vested" in seeing PS3 die. Competition is a good thing. A lot of people are laughing at Sony's attitude that if they took a crap in a box and put the PS name on it, it would sell. Well, it isn't. They've offended many people with their "holier than thou" attitude and are now paying the price. There's something that is pleasing about watching a pompous blowhard fall flat on his face. Many books and movies center around this very point. Sony was too stuck up for their own good and it's coming around and biting them on the ass.

[soniqstylz]

Source

This has a little more information and breaks it out some by divisions.

As to why people are saying the PS3 is dead, my opinion is that normally when a product launches the demand is high for a longer period of time than what has been seen for the PS3. Bulkstacks of PS3s in virtually every store so soon is not a good sign since it means that, while the retailers did order all the product available (since I'm sure they expected PS2-type sales), consumers are not stepping up to the plate to buy it. The PS3 as it stands now is a product failure. That doesn't mean they can't turn it around. Good games, price cuts, some sort of "killer app" can definitely bring the PS3 back in the game. The down side is that while consumers (and developers for that matter) wait for that to happen they may find the 360 or Wii work just as well for them.

I think that's pretty much why they're on shelves. No reason to buy yet (at least not for me). Resistance goes after the same market that typically buys XBox-type games: shooters. Trying to jump into a market that has Lost World, Halo, F.E.A.R., and Gears. I don't play any of those, so Sony's

"killer app" so far doesn't move me. Give me a game that I can't get on PC or PS2, and something that I really really really want to play, and I plan on getting it.

Same for a 360. If Gears does come to PC, I don't see me getting a 360. I have no interest in Halo, and there's nothing else exclusive that gives me a reason to grab one.

I do think that the coming games like Heavenly Sword, DMC4, Lair, MGS4, and GTAIV (yes, I know it's not exclusive, but some of the DLC is exclusive to either console) will be system movers come spring and summer. For some reason, a lot of people are looking forward to Motorstorm, but I can't see buying a console just for that game.

There really is no one "vested" in seeing PS3 die.

Except Bill Gates ;)

[DrunkenMaster]

The report is a tad fishy though.

Nintendo didn't pour in as much money into Wii development. Its basically a Gamecube with a bit of extra juice. If anything its probably more fair to compare the performance of MS Games vs Sony Games. Sony never tried to compete in the same market as Nintendo.

And Sony invested heavily in the Cell CPU. The higher production and development costs gone into the PS3 are sure to factor into the losses. Even if they sold a million more PS3s, it wouldn't put a dent into their losses - accounting to margins and game sales.

[ToneKnee]

The report is a tad fishy though.

Nintendo didn't pour in as much money into Wii development. Its basically a Gamecube with a bit of extra juice. If anything its probably more fair to compare the performance of MS Games vs Sony Games. Sony never tried to compete in the same market as Nintendo.

And Sony invested heavily in the Cell CPU. The higher production and development costs gone into the PS3 are sure to factor into the losses. Even if they sold a million more PS3s, it wouldn't put a dent into their losses - accounting to margins and game sales.

They wanted to compete against the Wii's controller though, didn't they?

The Cell CPU was being developed by IBM anyways, Sony never started the project, the PS3 is just the first Cell CPU based product to hit the market.

The real cost of the PS3 is down to the Blu-ray drive.

[gunnerhkjp]

They wanted to compete against the Wii's controller though, didn't they?

The Cell CPU was being developed by IBM anyways, Sony never started the project, the PS3 is just the first Cell CPU based product to hit the market.

The real cost of the PS3 is down to the Blu-ray drive.

The official agreement to start the developement of the broadband processor was signed March 2001 by Sony, IBM, and Toshiba.

The cell processor was developed with considerable input from Sony and a lot of the cell patents are owned by SCEI.

Back to topic, it seems TVs and Cell phones are doing very well according to the financial report.

<Edit>

It also seems that the 65nm CELL processor production has started

Edited January 31, 2007 by gunnerhkjp

[Skiver Veteran]

If anything, it's nice to dream :rofl:

are you mad? without sony what does the xbox have to compete with? competition is nothing but good when it comes to technology! it drives people to design make and produce something better then the other guy can! if the other guy is gone where is the drive?!?! we can see that nintendo have no interest in going into the HQ gaming sector... they produce fun consoles that sell well enough to keep em going!

i hate this type of attitude when it comes to consumer walls, people dont seem to be happy with their chosen brand being the winner... they always want to destroy the competition which in the long run will only bring slower drive to improve anything!

[bob_c_b]

So all the sites that track sales and place the ratio at least at 3:1 Wii to PS3 AND all employee reports of non-moving stock, from many types of stores are ALL wrong?

Like I stated in my other post, I have yet to see an PS3 on the shelf at Target, BestBuy, Circuit City or CompUSA and while I don't live in the huge city, I don't live in hicksville either. Does that mean it's a huge seller or that there is still a shortage? See how anecdotal evidence works; I can support either viewpoint with what I have seen. I'll take sales numbers seriously when NPD publishes, anything else is just opinion.