Sony to lose money, but still probably break even

by Nick Doerr { Jan 30th 2007 at 2:00PM }

Are you ready for some stock-talk and business-related profit/loss numbers? Me neither, but let's do what we can anyway. Bloomberg released a wordy, but pretty concise, report about Sony's predicted 50% loss due to high demand for the Wii and lower-than-expected demand for the PlayStation 3. Actual numbers? This time last year, Sony was reporting a whopping 169 billion yen profit. This year? 84 billion yen.

All is not lost, though. Due to sales of those beautiful Bravia TV's and growth in the movie industry, Sony may exceed its overall profit target for the fiscal year. So, game division equals ouch, but the other divisions apply band-aids. In fact, Sony is so confident in its other divisions that they're expecting to report a profit of 122 bullion yen -- 50% higher than they said back in October.

If you take anything away from this, make sure that it's this: Sony is covering the PS3's start-up. Producing and pricing it at a loss, they fully expected to lose money in the gaming division. Luckily, they've got a very strong electronics department and a solid hold in the movie industry. Sure, the laptop battery recall sucks (the biggest ever recorded), but that doesn't seem to be hindering Sony from moving forward. Anyway, if you're a business/stock buff, check out Bloomberg's article for a more detailed analysis of the situation.

[via Bloomberg]

Tags: Playstation 3, Playstation3, PS3, Sony

Reader Comments (Page 1 of 1)

Colin @ Jan 30th 2007 3:39PM

Dang Nick,
Should have waited just another hour or two to post this. Sony just released their numbers:
http://www.1up.com/do/newsStory?cId=3156799

And surprise surprise, the loss was actually only a TENTH of what bloomberg was expecting. There was actually only a 5% drop in profit, with Sony still posting a 160 billion yen profit.

Once again, the rumors of Sony's death have been greatly exagerated. :p

-Colin

ndoerr @ Jan 30th 2007 3:17PM

@ Colin -- nice! Dang, I jumped the gun again. In any case, it's good to know Sony didn't get kicked in the face as badly as was rumored. But Bloomberg was right in saying that the other departments, especially the movie industry!, eased the pain the PS3 has been initially causing Sony. Good stuff. Thanks for the update!

Adam540 @ Jan 30th 2007 3:23PM

People seem to be a little shocked that Sony is actually rasing there expectations for the next fiscal year but to me it seems pretty obvious. everyone seems to be forgetting that little thing called Spider-Man 3. This movie will smash records all over the place bringing in the mad cash for Sony.

CW @ Jan 30th 2007 4:46PM

@Nick and @3,

The ps3fanboy title and the comments here are more than a bit misleading.

Sony did not report a loss, has no plans on losing money, and is doing much, much better than breaking even.

The results reported today are for $1.34 Billion net income (profit), for the 3rd quarter that ended December 31.

Taken individually, the games division of Sony lost $455 million on sales of $3.7 billion. To put this in perspective, Microsoft's game division (EDD) reported a loss of $289 million on sales of $2.9 billion for the same quarter.

Colin @ Jan 30th 2007 6:18PM

CW,
Thats why I said:

"There was actually only a 5% drop in profit, with Sony still posting a 160 billion yen profit."

But its true, I did say 'loss' earlier, even though its just a reduction in profit. It's also worth keeping in mind that Microsoft has had a 300 million dollar loss from their Entertainment devision (the 360 one) for the past two years:

http://www.next-gen.biz/index.php?option=com_content&task=view&id=4613&Itemid=2

So huge losses from a gaming division is normal during launch. Course for Microsoft, its normal for their console to just never make them money.

http://www.next-gen.biz/index.php?option=com_content&task=view&id=3988&Itemid=2

:p

-Colin

Will @ Jan 30th 2007 8:01PM

Adam: sure spiderman is going to bring tons of profit, but that was already figured into their forecasts...it's not like they just now are saying "well, you know we have this really big movie...i might make us some money". the forecast go is they figure about what each department should make. you would have to read further into their report to see which divisions they're raising their expectations for