Sony Financial Results, FY to 31-Mar-09

[catisfit]

http://www.sony.net/SonyInfo/IR/financial/fr/08q4_sony.pdf

Game

Sales and operating revenue: Y1,053.1bn
Operating loss: Y58.5bn (improvement of Y66.1bn YoY)

Decrease in operating loss, due to PS3 hardware cost reductions and increased PS3 software sales, despite the decrease in sales in the PS2 business.

Hardware

PS3 hardware unit sales: 10.06m (increase of 0.94m, +10%)
[Q1:1.56m Q2:2.43m Q3:4.46m Q4:1.61m]

PSP hardware unit sales: 14.11m (increase of 0.30m, +2%)
[Q1:3.72m Q2:3.18m Q3:5.08m Q4:2.13m]

PS2 hardware unit sales: 7.91m (decrease of 5.75m, -42%)
[Q1:1.51m Q2:2.5m Q3:2.52m Q4:1.38m]

Software

PS3 software unit sales: 103.7m (increase of 45.8m, +79%)
[Q1:22.8m Q2:21.1m Q3:40.8m Q4:19m]

PSP software unit sales: 50.3m (decrease of 5.2m, -9%)
[Q1:11.8m Q2:11.8m Q3:15.5m Q4:11.2m]

PS2 software unit sales: 83.5m (decrease of 70.5m, -46%)
[Q1:19.3m Q2:23.1m Q3:29.7m Q4:11.4m]

 

[Rangers]

Very tough quarter for Sony.

I dont understand why all their losses seem to be concentrated in this quarter. As I understand it as a whole they were profitable for the first 3 quarters, then suddenly lost 1.65B this last one. I mean the recession has been going on quite some time. Similar gaming lost $260 million this Q.

On the one hand the forecast to sell 3 million more PS3's in fiscal 09 strongly suggests a price drop. On the other, 260 million gaming losses quarterly makes you wonder how they can do it.

 

[tangey]

Very tough quarter for Sony.

I dont understand why all their losses seem to be concentrated in this quarter. As I understand it as a whole they were profitable for the first 3 quarters, then suddenly lost 1.65B this last one. I mean the recession has been going on quite some time. Similar gaming lost $260 million this Q.

On the one hand the forecast to sell 3 million more PS3's in fiscal 09 strongly suggests a price drop. On the other, 260 million gaming losses quarterly makes you wonder how they can do it.

Last quarter they sold 2.13m PSPs. In the same quarter, Apple sold 7M iphone/itouches, with 1000's of games (many crap, but some really quite good) available from the app store. Sony and others are right to be worried about the Apple gaming threat.

 

[catisfit]

On the one hand the forecast to sell 3 million more PS3's in fiscal 09 strongly suggests a price drop.

Confirms it, at least in their current plan.

I had a brief look but I can't see any forecasts from Microsoft. Using the same FY definition (FY ends 31-Mar):

     To 31-Mar-09  Forecast 31-Mar-10
NDS      31.18m       30m (down 1m)
Wii      25.95m       26m (level)
PSP      14.11m       15m (up 1m)
PS3      10.06m       13m (up 3m)
PS2       7.91m        5m (down 3m)

360      11.2m         ?

 

[liolio]

They are still bleeding money... They have to be cheaper this fall or they understand what suffering really mean.
Ms will push hard this fall it's a given, they have offer a special rebate (-40 euros) twice in Europe so I can't see them not doing it again this fall and that could come on top of another 50 euros price cut.

 

[Rotmm]

I had a brief look but I can't see any forecasts from Microsoft. Using the same FY definition (FY ends 31-Mar)

Microsoft's financial year ends June 30th.

 

[Brad Grenz]

The iPhone is a threat to the PSP the same way the PopCap games are a threat to HD consoles.

 

[RobertR1]

So Sony is about 4.2billion in the hole with the PS3 and that's with the PS2 and PSP profits masking the losses further. A nice case study on what not to do.

 

[catisfit]

Microsoft's financial year ends June 30th.

I know. I couldn't find any in their Jun-08 release either.

 

[Rangers]

So Sony is about 4.2billion in the hole with the PS3 and that's with the PS2 and PSP profits masking the losses further. A nice case study on what not to do.

Yeah its pretty scary but, I guess nothing to do but see the course now.

And they desperately need a price cut too!

I cant imagine if they had a "do over" on PS3 it would be anything like what it is today. I guess that's why Kutaragi no longer works there.

Anyways, the 13 million forecast really suggests they will get to 299. I'm thinking by fall perhaps in conjunction with this "PS3 slim". Hard to see how they do it if they only cut in fall though.

 

[patsu]

Very tough quarter for Sony.

Very tough year and quarters for all CE manufacturers in Japan !

The Sony CFO mentioned yesterday that they lose about $40 (10%) for every hardware sold. The high Yen currency also has a negative impact (from 8% to 18%), so they are definitely suffering.

I dont understand why all their losses seem to be concentrated in this quarter. As I understand it as a whole they were profitable for the first 3 quarters, then suddenly lost 1.65B this last one. I mean the recession has been going on quite some time. Similar gaming lost $260 million this Q.

On the one hand the forecast to sell 3 million more PS3's in fiscal 09 strongly suggests a price drop. On the other, 260 million gaming losses quarterly makes you wonder how they can do it.

Hardware cost will continue to lower with the slim model (assuming it's true). More software and services will be released. And hopefully the crisis and Yen "tax" will go away. That's how they can "do it".

I think as a company, they are probably shooting for more than just "make it". They will look for breakthrough one way or other. The restructuring also costs Sony money in the short term (but should save in the long term). The report mentions continual restructuring moving ahead. They can't come soon enough.

I am still curious where the free network infrastructure go... in operating cost ?

 

[obonicus]

So Sony is about 4.2billion in the hole with the PS3 and that's with the PS2 and PSP profits masking the losses further. A nice case study on what not to do.

And the only case study of what to do (and only up to a point) is potentially Nintendo.

 

[JardeL]

The Sony CFO mentioned yesterday that they lose about $40 (10%) for every hardware sold. The high Yen currency also has a negative impact (from 8% to 18%), so they are definitely suffering.

This is interesting news ... I dont know which territory he is tlking about but I'll take JP ;

PS3 retail price - 3800Yen
%110 of it - 4180 Yen = 439 USD

PS3 manufacturing cost is 439 USD ... If this is correct then they make lots of money from PAL hardware ... 400 euros = 540 USD , 100 USD profit per PAL PS3

 

[Shifty Geezer]

So Sony is about 4.2billion in the hole with the PS3 and that's with the PS2 and PSP profits masking the losses further. A nice case study on what not to do.

I know it's a very boring old chestnut, but we do need to factor in the BluRay aspect. If in ten years' time, BRD has raked in enough money to fill that hole several times, it won't be a 'what not to do' case study. And without that long-term retrospective look, we can't evaluate the choices fairly.

 

[AlNom]

Any idea on what the royalties are for BD movies?

 

[Rotmm]

This is interesting news ... I dont know which territory he is tlking about but I'll take JP ;

PS3 retail price - 3800Yen
%110 of it - 4180 Yen = 439 USD

PS3 manufacturing cost is 439 USD ... If this is correct then they make lots of money from PAL hardware ... 400 euros = 540 USD , 100 USD profit per PAL PS3

It's not quite that simple, as you're assuming that the retail price is the price that Sony sell it at, which is not true. You have International shipping, local (European) warehousing, local (European) distribution and the retail markup to take into consideration.

Also, the Dollar to Euro comparison falls on another level, as European retailers generally expect a greater margin than their American equavilents.


However, for ease of calculation, let's just take the base European price of 400 Euro and work from there.

The average VAT/Sales Tax in the European is about 19% so the actual base price of the machine is €336, which at todays exchange rate equates to ¥43,261. Taking your manufacturing figure, that equates to a profit of ¥1,461 (or $15 or €11). Once you look at some of the pack-in deals, with a game or two, that is eroded.

It's worse, of course, when they sell to the UK. Taking the base price of the PS3 at £299 and removing VAT, you end up with a figure for Sony of £260 (Vat is currently 15%). That is ¥37,614, meaning a loss of ¥4186 ($44, €33, £29) on every PS3 sold in Sony's biggest European territory.


So there is no $100 per console profit in the European territories

 

[JardeL]

May be... I think I did a mistake with " manufacturing cost " term... He did not mention that ;

Sony CFO mentioned yesterday that they lose about $40 (10%) for every hardware sold.

Anyway , if that %10 lose statement is true for JP , then I dont think Sony lose money on PAL PS3s ... Maybe only in UK as you said ...

 

[obonicus]

Should we be talking about Sony losses per consoles in USD? Isn't it the same problem as trying to estimate the PS3's cost in USD?

 

[Rotmm]

Should we be talking about Sony losses per consoles in USD? Isn't it the same problem as trying to estimate the PS3's cost in USD?

That's why I ignored the USD conversion argument and did direct conversion rates between the Yen and the relevant European currency.

 

[Scott_Arm]

Well, the 10% number would most likely be an average, meaning they'd lose more or less in different regions, no? Obviously they'd have those numbers for each reason, but I'm sure communicating one average number to stakeholders would be easier.