Merrill Predicts Sony to Lose 6 Billion + over 5 Years

[pc999]

Sony isnt MS. They sell a product to make a profit. They cant afford making such HUGE losses in a such a long term period and not care.

Unless those 6B$ generate (eg) 6B in HDTVs and 6B in BR rights, or even 3,75B for each (if you see Sonys past they usually dont generate much proffit, %wise (eg PS2 had a proffit of 1,5% till now, more or less 1,5B IIRC)).

Its not unknown if he used the software sales in his analysis because simply there is no data available yet that can develop a valid analysis based on this variable. There is nothing in existence that shows the behaviour of the demand on sofware sales because the console just got released. Sofware sales havent even started

If people had date they wouldnt need analysts.

Anyway most people are looking in a straight line into this analysis, just because his reasons arent evident that dont mean he is not right (even I, Powderkeg and others already gave a few possibilitys) and considering how much this guys are paid I would give them the benefict of doubt anyway.

Still only the future will tell.

 

[Shifty Geezer]

and considering how much this guys are paid I would give them the benefict of doubt anyway.

Some of the most well paid people in the world are or have been managers of companies who have only let those companies fall to pieces. I wouldn't take a fella's pay-packet as any indiciation of their competancy!

 

[Nesh]

Unless those 6B$ generate (eg) 6B in HDTVs and 6B in BR rights, or even 3,75B for each (if you see Sonys past they usually dont generate much proffit, %wise (eg PS2 had a proffit of 1,5% till now, more or less 1,5B IIRC)).

Thats a big if and Sony knows it.

Regardless this involves risk and their take on the matter still remains the same as I said. The developed it to profit. Every department in sony involves risk and great competition. Hoping that everything will go ok from other departments and thus ignoring the losses from gaming department isnt a wise thing for any company to do unless they have guaranteed revenues and profits like MS.

If people had date they wouldnt need analysts.

Anyway most people are looking in a straight line into this analysis, just because his reasons arent evident that dont mean he is not right (even I, Powderkeg and others already gave a few possibilitys) and considering how much this guys are paid I would give them the benefict of doubt anyway.

Still only the future will tell.

Ahm thats wrong. Analysts use available present and past data and make models and calculations to predict the future course. Otherwise they are as good at predicting as little Jimmy. Just like the monkey example I mentioned above.
And this may sound weird to you but experience has shown that most analysts arent needed. They dont make better predictions than anyone else. So what do they do? They form expectations, expectations form investing behaviour, and investing behaviour forms the course of a company.
If he is right it will be coincidental because his analysis goes as far as many years.

If his analysis expanded as far as 2007 or 1-2 years from now I might have considered it. Its easier to make accurate predictions about "tomorrow". But he expanded it as far as.....4-5 years??? You need more information to make such a long term analysis. During such a period there are TONS of variables that can play a big part on the products and company's course. Otherwise you are just guessing (and when I say guess I mean guess like jimmy or tommy or Nesh or Bob).
I can guess too.

Similar predictions were made on 360 and PS2. Only to end up wrong.

 

[Powderkeg]

Making a smaller profit than on some other occasion is not the same thing as losing money. Your "cost of reduced sales" is lunacy.

If your software sales are subsidizing your hardware losses then reduced software sales would certainly increase the total net loss.

 

[Rolf N]

If your software sales are subsidizing your hardware losses then reduced software sales would certainly increase the total net loss.

Correct. And incompatible to what you posted before:

What makes everyone think the $6 billion in predicted losses is ALL hardware related losses?

Decide now. Will they lose 6 billion on hardware alone or will they lose extra on software?

 

[London Geezer]

Or maybe.... Bluray games and movies are sold at a loss due to bad disc yields!1! Makes perfect sense.

 

[RAZurrection]

Wow that's even more than MS.