Sony Announces 68 Per Cent Drop in Profits

Sony has announced that the launch of the PlayStation 3 has contributed to a 68 per cent drop in operating profits to JPY 71.8 billion (EUR 438.3 million) for the year ended March 31, compared to 226.42 billion (EUR 1.38 bn) a year earlier. "In the Game segment, there was a significant operating loss as a result of the sale of PS3 at strategic price points lower than its production cost during the introductory period," said the company in its annual report.

Sales for the twelve months were up 10.5 per cent to JPY 8.3 trillion, with net profit up 2.2 per cent to JPY 126.3 billion (EUR 773.4m). Sony also suffered its biggest quarterly loss for four years for the period from January to March 2007, with a net loss of JPY 67.6 billion (EUR 413m).

The company was positive about the future, expecting PlayStation 3 sales to increase and the cost of manufacturing the new home console to drop. "A significant reduction in operating loss is expected due to rapid reductions in hardware production costs and an enhanced line-up of software titles in the PS3 business," said the company. Sony expects operating profits of JPY 440 billion (EUR 2.6bn) for the current financial year ending March 2008.

View: Gamesindustry.biz

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Sony expects operating profits of JPY 440 billion (EUR 2.6bn) for the current financial year ending March 2008.

Are they delusional? How in the world do they realistically anticipate an (approx.) 83% profit recovery for the next fiscal year? From EURO 438.3 million to 2.6 billion; do the math. I'm sure the PS3 will rebound in some way but that thing can't possibly be the leading factor that will get profits higher than even last year's report.

At this point it's quite difficult to believe that Sony will ever make a profit off PS3 hardware, knowing the XBOX isn't profitable (even with lower manufacturing costs) and hasn't been since the very day Microsoft opened up their home console division. If Sony makes a price-drop on PS3, there's still not much hope profit-wise since they lose so much money at current retail prices already--not to mention people generally wouldn't notice because it's still higher than the 360. It's possible that Sony's betting on increased efficiency in manufacturing and lower blu-ray manufacturing costs as the market becomes more saturated with the format, but still... an 83% jump?? And with so many game developers jumping ship from the Sony yacht and cutting off once-exclusive IPs, profit from software isn't going to be stellar either.. at least not stellar enough to get them to new heights.

it's not just the PS3, they expect the PSP to increase sales with the price cut and PS3 conectivity, and also they expect large profits from bluray, or at least to recoup a lot of their losses. I don't think everyone truly understands sony is not just the PS.

heads have already rolled (bye Ken) so i am sure they are trying to sort their issues out.

I don't think you are right Roger. Sony Pictures is in HUGE debt and still recovering from the MGM purchase. I believe it was around 6 billion dollars or so. TV and general electronics dept took HUGE hits on several fronts and are actually losing money. UMD failure, exploding batteries, TVs that are behind Panasonic, Samsung, LG, Sharp etc.

The ONLY profitable division in Sony was Playstation division or as you call it gaming division. There's logical sense that people said that if Playstation division fails Sony is in huge trouble. Almost every thing Sony started in the past decade resulted in failure.

Look up some facts. Sony owes a LOT of money even though they seem to generate a lot they are in a very bad financial position and PS3 and Blu-Ray was their struggling move to get back into race. That's why they've been playing dirty as much as they could, cause if they lose this they will not be able to sustain their divisions. Expect huge cutbacks and layoffs pretty soon unless by some miracle PS3 raises up from the dead and starts generating some game revenue.

I don't disagree that Sony is in a hole. You have perfectly valid points. I'm just saying that world-wide companies have been targeted by experts before to bite the dust, some of which were already tasting said dust, and today they're stronger than ever. I just don't believe that a PS3 failure would mean the end of Sony...I believe that they'll weather this storm and come out OK.

For example, remember when AOL bought Time-Warner? Less than two years later, they reported what was then the largest loss ever reported by a company: 99B. Many financial experts thought they were done. Time-Warner had to take back the company from AOL and shed a few properties, but four years later they're still here, and making decent progress.

IF what you say is true, whcih it obviously isn't, just by reading the article it proves you absolutely wrong.

"The ONLY profitable division in Sony was Playstation division or as you call it gaming division"

so in that case
"In the Game segment, there was a significant operating loss"

would mean that the only "Profitable: part of sony according to you at least lost money, the fact sony as a whole still made a profit ( JPY 71.8 billion ) says you my freind are an idiot.

as you state

Look up some facts (or try read the articel first)

a compnay making EUR 438.3 million is not going to die any time soon.

whocares78 said,
IF what you say is true, whcih it obviously isn't, just by reading the article it proves you absolutely wrong.

"The ONLY profitable division in Sony was Playstation division or as you call it gaming division"

so in that case
"In the Game segment, there was a significant operating loss"

would mean that the only "Profitable: part of sony according to you at least lost money, the fact sony as a whole still made a profit ( JPY 71.8 billion ) says you my freind are an idiot.

as you state

Look up some facts (or try read the articel first)

a compnay making EUR 438.3 million is not going to die any time soon.

First of all I didn't call anyone name but since you started it you are clearly an idiot. Playstation division made huge profits with PS2. Nowhere in my response did I say that they are not generating positive revenues, however Sony is in trouble a lot more then you think. The amount of debt they have is way passed safe levels and a lot more then what they are worth.

End of 2006, Fitch Ratings (a company that assesses the risk level of debt) downgraded Sony's debt rating just above critical with several explanations:

Sony's "game segment will likely incur large losses over the next three to five years"
"Sony can no longer price its products at a material premium to its competition"
Delayed launch of the PS3 in Europe
The big Sony battery recall
The "PS3 is likely to face more severe competition than [the PS2 did]"
"Sony has also been showing weaker financial results and credit metrics compared to its rivals in recent years"

The company IS making money and I never said it didn't. If it wasn't profitable you would see bankruptcy. In business world, debt consolidation and long-term revenues are much more important. Currently Sony is quite a bit more in debt then what they generate or what they are worth and it seems that it will get worse and worse over next 3-5 years and this is very bad. They just can't generate enough to pay off debt. Add on top of that layoffs and pay cuts and you are getting a real picture.

Where did I say Sony will seize to exist? You are pulling statements and assumptions out of your ass. I just noted that some experts said that with PS3 and Blu-Ray failure Sony as a whole would be seriously endangered as a company and I completely agree. Do you know what happens when you owe more then you generate and the investors come to collect? You don't? The company goes bankrupt and the banks seize their assets.

In 2005 financial experts predicted if PS3 fails it might be the end of Sony. And it's slowly happening.

For those who don't really understand it, PS3 is just a PC with multicore processing and semi-cool packaging and nothing more. What console do you have to INSTALL games on? With PS3 you do. The whole feeling of running PS3 is the absolutely the same as running the PC. Not to mention miserable support for developers, high price and complete lack of software.

Why is this surprise to anyone is beyond me.

Financial experts once spelled out the doom of IBM. There was another time they claimed Apple (and their shareholders) should say their prayers. On even-numbered years, some of them say Linux is perfectly poised to replace Windows, making MS irrelevent.

If the PS3 fails, it might mark the end of the Sony Gaming Division, but Sony will be just fine.

are you stupid, or just a moron, i knoiw you definatley don't understand.

How the hell is the PS3 anythign like a PC, besides it has a hdd memory and processor, if the PS3 is like a PC then so is the Xbox, if you are just goign on the fact the GUI may resemble somthing like a PC then you are once again an idiot and while were at it, hell a tivo is really just a PC.

whocares78 said,
are you stupid, or just a moron, i knoiw you definatley don't understand.

How the hell is the PS3 anythign like a PC, besides it has a hdd memory and processor, if the PS3 is like a PC then so is the Xbox, if you are just goign on the fact the GUI may resemble somthing like a PC then you are once again an idiot and while were at it, hell a tivo is really just a PC.

You are clearly the one being a moron. Instead of giving arguments you insult people.

Let me spell it out to you moron:

1. Game installations are exactly like a PC
2. Even Sony calls PS3 a personal computer
3. You have a browser and you INSTALL applications and plugins
4. You have Wi-Fi card in there
5. It's huge as ass
6. It's loading applications and games FOREVER just like PC
7. You have to reboot machine for updates and then INSTALL them
8. You can install an OPERATING SYSTEM
9. They slapped the whole machine together in a hurry and ripped off the PSP UI they already have
10. It uses regular hard drives
11. The PS3 actually boots up and it takes like a freakin' minute to do so

Xbox is NOTHING like PC. It's a true gaming CONSOLE.
- Updates take a second
- I have yet to see a game that needs installation, they start right away
- Demos WORK right away as soon as they are downloaded (NO INSTALLS)
- It uses it's OWN system (Dashboard)
- Everything is streamlined and is COMPLETELY gaming and media associated (no OSes and stuff like that)
- You don't need USB cables to charge accessories
- Dashboard boots up in a sec


and before you start crapping around again ass wipe, for the record I own both and PS3 is NOTHING more then a slapped on, multicore PC. Xbox 360 on the other hand is what it is, a true gaming console with media capabilities. This is also why Microsoft swore that they will never make a keyboard and mouse for X360. Because IT IS NOT a computer.

Who's calling who a moron?

You don't own a PS3, it's quite obvious by your BS & FUD filled post.

I own BOTH.

Forever to boot? 16 seconds from the time you press power to a functional XMB.
The 360? SIXTEEN SECONDS! THE EXACT SAME AMOUNT OF TIME.
Timed with a Casio in stopwatch mode.

The 360 runs on a Windows kernal. It's a PC as well. It has a CPU, RAM, video chip, and OS. The chipset is made by SiS. It has a northbridge, etc.

The PS3 is a tad bigger than the 360, and there's no power brick hanging off of it.

It runs a LOT quieter than the shop vac sounding 360.

The 360 requires reboots as well for major SYSTEM updates. GAME updates are the ones that don't require reboots.

360 load times are slow. The PS3 *caches* game data the same way the 360 does. If you have a 360 20GB HD, only 13GB is usable because the rest is game cache. It's a Samsung SATA drive BTW. A PC drive.

The PSP UI (XMB) is considered a success and the PS3 is lauded for it's interface (and it's going across Sony's entire product line, including their high-end receivers). The dashboard is confusing and has seen major redesigns over the past year and a half.

Again, the PS3 is lauded for the ability to load a Linux solution. MS is afraid of hackers and doesn't allow this kind of access. Media Center ability is somewhat hampered by the inability to play non MPEG/WMV formats (no Divx, AVC, etc).

USB cables to charge accessories? That's because you need to buy BATTERIES. Or the charge thing. You by buy buy. You buy a WiFi. You buy a larger HDD. You buy batteries.

Slapped together in a hurry? The PS3 design was previewed over a year in advance of launch, opposed to the 360 which was introduced at that years' E3. MS *forced* to extend the warranty due to the poor design. Poor heat dissapation. Faulty DVD drives that scratch discs.

Oh, by the way in the latest Official XBOX Magazine they preview a Blackberry like keyboard snap-in.

You lie about Blu-ray. You lie about PS3. Why anyone would believe you now is beyond insulting of intelligence.

PeterTHX said,
Who's calling who a moron?

You don't own a PS3, it's quite obvious by your BS & FUD filled post.

I own BOTH.

Forever to boot? 16 seconds from the time you press power to a functional XMB.
The 360? SIXTEEN SECONDS! THE EXACT SAME AMOUNT OF TIME.
Timed with a Casio in stopwatch mode.

The 360 runs on a Windows kernal. It's a PC as well. It has a CPU, RAM, video chip, and OS. The chipset is made by SiS. It has a northbridge, etc.

The PS3 is a tad bigger than the 360, and there's no power brick hanging off of it.

It runs a LOT quieter than the shop vac sounding 360.

The 360 requires reboots as well for major SYSTEM updates. GAME updates are the ones that don't require reboots.

360 load times are slow. The PS3 *caches* game data the same way the 360 does. If you have a 360 20GB HD, only 13GB is usable because the rest is game cache. It's a Samsung SATA drive BTW. A PC drive.

The PSP UI (XMB) is considered a success and the PS3 is lauded for it's interface (and it's going across Sony's entire product line, including their high-end receivers). The dashboard is confusing and has seen major redesigns over the past year and a half.

Again, the PS3 is lauded for the ability to load a Linux solution. MS is afraid of hackers and doesn't allow this kind of access. Media Center ability is somewhat hampered by the inability to play non MPEG/WMV formats (no Divx, AVC, etc).

USB cables to charge accessories? That's because you need to buy BATTERIES. Or the charge thing. You by buy buy. You buy a WiFi. You buy a larger HDD. You buy batteries.

Slapped together in a hurry? The PS3 design was previewed over a year in advance of launch, opposed to the 360 which was introduced at that years' E3. MS *forced* to extend the warranty due to the poor design. Poor heat dissapation. Faulty DVD drives that scratch discs.

Oh, by the way in the latest Official XBOX Magazine they preview a Blackberry like keyboard snap-in.

You lie about Blu-ray. You lie about PS3. Why anyone would believe you now is beyond insulting of intelligence.

You've proven many times that you are a moron..you are just talking rubish. I'm not going into discussion with you.

And just to shut you up once and for all, and I'm pretty sure you are the one doing the lying non-stop

http://gear.ign.com/articles/786/786125p3.html


I'm not going into discussion with you.

Well, because you cannot. You get proven wrong every single time.

All you can resort now is to the usual personal insults.

Oops! Too late! :rolleyes:

PS: who's setup is that really? Because by your post you clearly have no idea how the PS3 works.
Or is it possible you've been caught in ANOTHER lie?

(PeterTHX said @ #9.7)
I'm not going into discussion with you.

Well, because you cannot. You get proven wrong every single time.

All you can resort now is to the usual personal insults.

Oops! Too late! :rolleyes:

PS: who's setup is that really? Because by your post you clearly have no idea how the PS3 works.
Or is it possible you've been caught in ANOTHER lie?

Usual insults? You are the one insulting man. Did you complete lose touch with reality?

You are the one calling me a moron you freak. Read your posts, I never insulted anyone until I was insulted myself without reason. And you have proven NOTHING, you are just blowing smoke up your own ass thinking you are right. You feel personally insulted when someone says anything bad about PS3, Blu-Ray or anything Sony related. That makes you, you are right, an idiot. Get a job, stop making your parents buy stuff for you and then you think you know everything and the stuff you have is the bestest in the world. PS3 is UNFINISHED piece of crap that was late to the market and was forcefully released so it wouldn't lose complete market to X360 and Wii.

The setup shown on IGN is my setup and yeah, that's my house, and I paid for all that stuff with MY MONEY. And unlike your complete fanboyism I only say how things are, not overhyping crap COMPUTER that people like you are trying to make look cool. You see fanboys like you, kids, are hyping crap because you didn't actually spend your own money on it, but your mom and dad's. When you make your own penny you would be more critical of products you buy because it's hard earned money.

Son, you are immature, unobjective and fail to admit things that most people in this world KNOW are true, just because it would taint your perfect fairy land. I have no reason to insult anyone, you are the one doing all the insulting and that other kid that calls everyone a moron and idiot in this thread.

Now go ask your mommy for another $60 so you can buy another MEDIOCRE game for your PS3 and you can go to forums saying how it looks 200 times better then anything on X360.

Freakin spoiled brats.


And just to make some things clear on the things you think are right:

The 360 requires reboots as well for major SYSTEM updates. GAME updates are the ones that don't require reboots.

Correct, PS3 on the other hand REQUIRES restart and INSTALL of the update.

360 load times are slow. The PS3 *caches* game data the same way the 360 does. If you have a 360 20GB HD, only 13GB is usable because the rest is game cache. It's a Samsung SATA drive BTW. A PC drive.

Did you measure this with stopwatch too? EVERYTHING runs faster on XBox 360, from games to interface elements. Only a person in denial would say otherwise. For MotorStorm it takes freakin' 20 secs to change a freakin' car.

The PSP UI (XMB) is considered a success and the PS3 is lauded for it's interface (and it's going across Sony's entire product line, including their high-end receivers). The dashboard is confusing and has seen major redesigns over the past year and a half.

PSP UI is a success no doubt, but EVERYONE said that PS3 was expected to have much more improved version of the UI. On a console this complex the PSP UI was not appropriate. The would've created something more advanced, if they had time, but they didn't. They were late with release for a over a year. They had to push it out.

Again, the PS3 is lauded for the ability to load a Linux solution. MS is afraid of hackers and doesn't allow this kind of access. Media Center ability is somewhat hampered by the inability to play non MPEG/WMV formats (no Divx, AVC, etc).

Again, what are you trying to say here? Yeah PS3 is just a computer, X360 is a GAMING console.

USB cables to charge accessories? That's because you need to buy BATTERIES. Or the charge thing. You by buy buy. You buy a WiFi. You buy a larger HDD. You buy batteries.

It's called OPTIONS. You don't have to buy any of those things to have a gaming experience. It's what CONSOLE is FOR. Second, I will pay $9 a year for batteries for my controllers while you will have to replace $50 controller when you battery goes out, not to mention that god forbid you leave the console turned on and not TURN OFF controllers through the PS3, you can say bye bye to your controller batteries and you'll have to recharge with your USB cable.

How ingenuious really. NOT!

Slapped together in a hurry? The PS3 design was previewed over a year in advance of launch, opposed to the 360 which was introduced at that years' E3. MS *forced* to extend the warranty due to the poor design. Poor heat dissapation. Faulty DVD drives that scratch discs.

HAHAHAHA now this is too much. Where EXACTLY did they show anything running on PS3? Killzone was one of the first videos and it was PRERENDERED. There wasn't a PEEP out of Sony about PS3 capabilities, just hype, statistical papers and no show. You seem to have forgotten fiascos with PS3 consoles being PREVIEWED with X360 consoles hidden, running in the background. And YEAH there were recalls, all consoles go through that when they are released, but this was all happening when X360 was ALREADY OUT and PS3 was nowhere to be seen.

Also, PS3 sucks up 380 watts of power, a far cry from the PS2 which sips a mere 45 watts. That means the PS3 uses more than twice the 160 watts consumed by the Xbox 360. The PS3's 380 watts will cost you around $40 a year to run if you play it two hours a day.

Oh, by the way in the latest Official XBOX Magazine they preview a Blackberry like keyboard snap-in.

You seem to show things that you cut out partially from articles just so you can PROVE your completely silly points. First off all let's take a look at that Blackberry keyboard snap-in.


Below is the QWERTY based beast that will connect directly into the Xbox 360 controller to support text and instant messaging.

Microsoft specifically SAID that this is only for chat and emails on Live etc. NOT gaming. From the start they said XBox 360 is A GAMING CONSOLE.

I might utter one seemingly pertinent word on the matter, and that word would be 'Owned.'

Sony is getting whupped up on. What with the 360 doing alright as a media center box and with the Wii hounding them down by actually innovating something it'll be a real trick for them to stay in the game.

You know they'll turn out alright. They will. Even if lots of people say no to their new console, there are lots of other Sony worshippers willing to stand up and buy, most likely. I've heard that a couple of my friends have come to the sad realization that 'Sony owns our souls.'

But I could be wrong. Maybe they'll flop and stop selling the PS3. Cataclismic failure.

Hoorah!

joshwa said,

I don't my friends band just got signed by Sony Records :disappointed:


Good luck to them, but don't be too surprised if their first CD is DRM'd to hell and back.

"In the Game segment, there was a significant operating loss as a result of the sale of PS3 at strategic price points lower than its production cost during the introductory period,"

I assume that means the company as a whole was profitable but the game division was not. Keep in mind Sony still has a lot of PS2 and PSP revenue coming in as well, so they may be watering down the truth on PS3 sales.

"68% drop in profits means a profit right?"

Let's read the article to find out!

"a 68 per cent drop in operating profits to JPY 71.8 billion (EUR 438.3 million)"

That means they made a profit of $438,300,000.00 EUR last year. Which is less than the 1.38 billion EUR profit they made the year before.

Although the dismal (but not surprising) failure of PS3 probably contributed greatly to this I would think their huge battery overheating fiasco didn't help either. Which is too bad because aside from those two things, Sony makes great products.

C_Guy said,
"68% drop in profits means a profit right?"

Let's read the article to find out!

"a 68 per cent drop in operating profits to JPY 71.8 billion (EUR 438.3 million)"

That means they made a profit of $438,300,000.00 EUR last year. Which is less than the 1.38 billion EUR profit they made the year before.

Although the dismal (but not surprising) failure of PS3 probably contributed greatly to this I would think their huge battery overheating fiasco didn't help either. Which is too bad because aside from those two things, Sony makes great products.

I disagree. They used to make quality products, not so much anymore. Personally, of the main japanese electronics corporations, I prefer panasonic.

There's a lot of strange decisions they made as regards the Playstation 3's usefulness on HDTVs that seem pretty ludicrous. (Frame lagging when playing PS2 games, lack of standard DVD upscaling.....) I'm hoping they get their act together in those areas. =P

C_Guy said,
Although the dismal (but not surprising) failure of PS3 probably contributed greatly to this I would think their huge battery overheating fiasco didn't help either. Which is too bad because aside from those two things, Sony makes great products.

That's a valid point, but keep in mind that these numbers are only for their gaming sales, I believe.

i agree with freeky, there quality and forsight seems to have dissapeared lately. PSP is a classic example of brilliant technology badly marketed, i reckon get the apple marketing people into sony and we will see amazing things happen