What about those shipment numbers, Sony?
by Nick Doerr 
{ Oct 27th 2006 at 4:00PM }
Good news for gamers, bad news for stockholders. That's pretty much how Sony's financial briefing went back on the 25th of October. Why bad for stockholders? Please. We need not even remind you of all the things adding up to stock "ouch" (battery failure, lawsuits galore, etc etc). What's less important and thus what we'll focus on is why there was good news for gamers! Apparently, hitting the quota of six million units by the end of the fiscal year (end of March, 2007), isn't going to be hard. Quoth the CFO: "We don't believe this is a difficult target." Haunting! Even more terrifying are the predictions of sales -- about 4.13 million by the end of the fiscal. But what of the two million due by the end of the calendar year? Perhaps that is not difficult either, but all we can do is cross our fingers and hope to find one (unless you pre-ordered... you lucky sons/daughters-of-a-gun).
Reader Comments (Page 1 of 1)
Andir2.0 @ Oct 27th 2006 4:47PM
I don't know if it necessarily meets the $2Mill mark, or I should say 1.9Mill, but counting demo units, kiosks, some fudge factor for shipping damage, and such it could get pretty close. I'm sure there are other factors I'm overlooking. That is of course, if they count the kiosk units in on the manufactured totals. Wasn't there like a half mill going to just that?
Andir2.0 @ Oct 27th 2006 5:21PM
I have another question for everyone as well.
Why is public opinion on the performance of Sony still up? I mean, if any company would have released a 94% profit margin change the stock value and money magazines would start predicting nothing but doom and gloom (as these bloggers are doing.) Even Forbes predicts a major upswing from Sony stating that the "Worst May Be Past".
"On Friday its stock jumped 1.24% to 4,880 yen ($41.50) in Tokyo, a day after the electronics maker revealed its second-quarter profit plummeted 94%, to 1.7 billion yen ($14 million), from 28.5 billion yen ($239 million) last year."
This tells me popular opinion about Sony is still very high. I mean, everyone sees this as a minor setback, and they see that Sony is handling it to the best of their abilities. If the same happened to another company, they would have been in a serious financial situation and their stock would have sunk like a rock. Sure, 94% is big for a quarter, but in the overall scale of things, the potential is there to recover very quickly.
"The very public flammability of a few of Sony's lithium-ion laptop batteries and global recall of 9.6 million battery packs has now cost the company 51 billion yen ($429 million), according to its latest earnings report."
If we look at the raw numbers you can see that a $429 million setback still kept sony in the "green" as far as comparing it to the last second quarter profit report of $239 million. Let's say they maintain that same profit margin from year to year, that means they grabbed a nearly $200 million extra cash from last year. This doesn't even include PS3 production costs of $366 Million. Did they pull this out of a personal holding? I know several companies keep large sums of cash on hand. Is the restocking of this horde ASAP causing them to predict lower than normal profits the next year or so? Wouldn't this be healthy?
"The battery issue is not likely to have a major impact over the longer term," said a note from analysts at Citigroup. "We expect that the games business will be the only issue that still needs to be dealt with in the fiscal year ending in March 2008 and beyond."
If you browse any number of game blogs who all seem to get there stories from a few select news sites, all seem to be reporting the end of Sony?? None of this adds up to me. Neither the Tokyo or New York Stock Exchanges have moved much at all (maybe 3% once or twice, but it's recovered since then.) If you look at the past 3 months (battery fiasco) you can see Sony is down a bit, but pan back to 6-12 months and you see they are actually still quite well off. And they have been in an upswing the past week. Overall, I don't see Sony being hurt much at all by everything that's going on.
It makes me wonder what all this internet anti-hype stems from, that is all.
microdot @ Oct 27th 2006 5:39PM
"It makes me wonder what all this internet anti-hype stems from, that is all."
fanboyism. plain and simple. the whole "my console is better than your console" assclowns that are typically between ages 12 and 14, or have the mental capacity of that age group.
there is no need to waste time contemplating it. they are mentally inept.
Vince @ Oct 27th 2006 5:51PM
Good stuff Andir2.0, I think Sony knew exactly what was coming, which is why they borrowed that wad of cash - http://www.gamesindustry.biz/content_page.php?aid=18082
Most rational people know there's good reason for the 94%, and I doubt Sony is worried about it.
Foppe @ Oct 28th 2006 4:14AM
I want to know how many of those units they expect to be released in Europe. 100.000?
stumpie @ Oct 28th 2006 9:30AM
Sony is playing with fire...they are betting big on PS3 / Blu-Ray...if they succeed...maybe a huge success. If they fail...it will be one huge fiasco.
When you look at 100 million consoles sold you think it's a low risk proposition...but everythin is different this time around:
Different Price, A format war that did not exist for DVD, Different competition - MS and Nintendo are making quite the showing this time around - Different environment for 3rd party developers who are all realizing the only way to be a Ubisoft or EA is to sell on as many consoles as possilbe.
jpgiv @ Oct 28th 2006 10:16PM
One thing to keep in mind is that Sony is a *massive* corporation, with a market capital of over 40 billion dollars (us) and 60 billion dollars in sales. They're also growing at a fairly strong clip. They also just paid out a dividend of 11 cents a share, which isn't bad at all.
Finally, Sony is trading down almost $10 from their high of ~$52, so when investment advisors are saying the worst is over, they're talking about the stock price, which has been in decline for over quarter now.
I'd agree with microdot that the "end-is-nigh" attitude in a lot of blogs is mostly due to fanboyism and a lack of understanding that for Sony, the PS3 is just one of many divisions it has, and even if they do lose ground to Microsoft and Nintendo in regards to video game console market share this generation around, I don't think anyone is suggesting that the PS3 is going to outright "flop." Unless by "flop" they mean, selling all available units on the market, a great number of which will be resold on eBay for untold amounts more than retail...
Also, as for Blu-Ray I think that given the way the format war is running now and the (comparative) ease of making a Blu-Ray + HD-DVD player (as opposed to say, a Betamax + VCR tape player), we could end up in a situation where neither format ends up with a clear victory.
Finally, in regards to Vince's comments about Sony recently taking out a loan for ~400 million ($us), the Japanese bond market has been so crazy for the last few years that you could actually take out loans with a *negative* rate of interest... So the fact that they're going to loans now instead of dealing with the rising (for the first time in over a decade) bond market isn't surprising at all.
truth @ Oct 29th 2006 9:58PM
"We don't believe this is a difficult target."
They don't *believe* it is? Or it isn't? Sounds wishy washy to me. Why should we believe anything they say? Everything that comes out of Sony's mouth is a lie lately. I pity the people that get those first units, they'll be lucky to get out of their houses with their lives after the dang thing explodes.