Sony Financial Results, Q2 2008

[Arwin]

Shifty, you could have just asked that given two arrogant people, whether or not it is possible for one of them to be more arrogant than the other. But over such obvious points, I simply wouldn't have bothered.

Anyway, apparently Sony released some 2nd quarter results, in which it posted a revenue growth of 12.5% despite losses in the game division, attributed to selling the PS3 at lower than BOM prices.

http://www.pro-g.co.uk/news/25-10-2007-6748.html

It will be interesting to see if this will change in the 3rd or 4th quarter with the 40GB model being out in the wild.

 

[RobertR1]

How much has the PS3 bled the gaming division so far?

That's a 841million loss despite the revenue being generated by the PSP and PS2. Are BR losses part of electronics or Gaming?

Does this quater include the Toshiba payoff for buying their Cell plants share and the insurance division sell off?

 

[one]

However, with the current format wars slowing adoption

Just making a unified format doesn't make price-sensitive consumers immediately convinced. Actually the more fierce the competition becomes for HD media, the more quickly player prices go down. If there was no format war hardware prices would be more expensive and the install base would be smaller at a given time. The competition in the game market drives it too, you can buy PS3 for $399 this year which makes the growth pace of Blu-ray even faster.

Are BR losses part of electronics or Gaming?

Obviously reported in the games segment. So the game division does the work of electronics that advertises the Blu-ray format.

Does this quater include the Toshiba payoff for buying their Cell plants share

No it's in 2008.

 

[Laa-Yosh]

How much has the PS3 bled the gaming division so far?

That's a 841million loss despite the revenue being generated by the PSP and PS2.

And that's for selling 1.3 million PS3s. What would've happened if it'd be more desirable?

 

[Carl B]

How much has the PS3 bled the gaming division so far?

A lot. I'll have the tallied figures shortly.

That's a 841million loss despite the revenue being generated by the PSP and PS2. Are BR losses part of electronics or Gaming?

PS3 losses are part of gaming, not sure what you mean by 'BR' losses. But the BD inclusion in PS3 is accounted for in gaming.

Does this quater include the Toshiba payoff for buying their Cell plants share and the insurance division sell off?

The sale is registered when the sale occurs: March 2008. As for the insurance business, it was spun off, not sold off... Sony still owns it. Plus, that'll be recognized in the next quarters earnings, not this one.

And that's for selling 1.3 million PS3s. What would've happened if it'd be more desirable?

Well, obviously they would have lost less money.

 

[Shifty Geezer]

Well, obviously they would have lost less money.

Not more, if the hardware's a loss-leader? Or are the costs being counted in manufacturing, so all sales of made stock returns $600 or whatever to the kitty?

 

[Carl B]

Not more, if the hardware's a loss-leader? Or are the costs being counted in manufacturing, so all sales of made stock returns $600 or whatever to the kitty?

Yeah the costs are for manufacturing; since manufacturing outstripped supply, and there was a retail price cut on existing inventory in the mix, they've taken a write-down on the inventory on top of the normal cost of business.

 

[RobertR1]

PS3 losses are part of gaming, not sure what you mean by 'BR' losses. But the BD inclusion in PS3 is accounted for in gaming.

Like MS couples Zune with the Entertainment divisions, are BR costs such as replication and marketing associated with the gaming or electronics?

 

[Carl B]

Like MS couples Zune with the Entertainment divisions, are BR costs such as replication and marketing associated with the gaming or electronics?

Electronics, of course.

 

[liolio]

Sony financial results, Q2 2007

I'm amazed that nobody has already posted it so...

http://www.marketwatch.com/news/sto...93-40E7-B49D-8D6A5D8CEACA}&dist=TQP_Mod_mktwN

I guess Sony still lose money on every ps3 sold, quiet a lot (in regard to the BOM discussion recently).

 

[one]

And that's for selling 1.3 million PS3s.

The price cut on already manufactured (not sold) 60GB PS3s in inventory is another source of the loss.

(See the page 4)
http://www.sony.net/SonyInfo/IR/financial/fr/07q2_sony.pdf

 

[Carl B]

We're discussing it in the strategy thread, but it's worthy of its own thread. I replaced your link with an actual financial news link though rather than a gaming website link.

 

[Laa-Yosh]

The price cut on already manufactured (not sold) 60GB PS3s in inventory is another source of the loss.

Wasn't that written off months ago? Or is it done in several parts through more then one quarter?

 

[Carl B]

Wasn't that written off months ago? Or is it done in several parts through more then one quarter?

It's written off in the quarter in which it occurs, so any cuts/write-downs between July 1st and September 30th would be included in these results.

 

[one]

Electronics, of course.

I don't think disc replication cost for Blu-ray game discs are subsidized by the electronics division (or it may not need subsidization for a single-layer disc).

 

[Carl B]

I don't think disc replication cost for Blu-ray game discs are subsidized by the electronics division (or it may not need subsidization for a single-layer disc).

I don't think that those game costs are subsidized at all though; rather they are just an extra nominal charge publishers have to pay.

Not to mention I think Robert was speaking to BD replication in the general sense, ie the equipment, studio subsidization, BDA membership activities, diode equipment, etc...

 

[Carl B]

A lot. I'll have the tallied figures shortly.

Going back to this, this is my previous yearly tally through fiscal '06:

(all amounts in billions of yen - we are in fiscal 2007 for those who get confused on the years)

1997 - 57

1998 - 117

1999 - 137

2000 - 77

2001 - (51)

2002 - 83

2003 - 113

2004 - 68

2005 - 43

2006 - 8

So.... over the past nine/ten years, Sony's game division has contributed a net of 652 billion yen in operating income to Sony's bottom line. In dollars, this amounts to ~$5.5 billion in positive contribution.

Since then we have the year '07 results, which were -232.3 billion yen. So far in fiscal '08, the total inclusive of the most recent reported quarter has been -126 billion yen.

 

[-tkf-]

I don't think disc replication cost for Blu-ray game discs are subsidized by the electronics division (or it may not need subsidization for a single-layer disc).

The single layer dics are 30 cent or something more than a HD-DVD that supposedly should be very cheap.

 

[RobertR1]

Thanks Karl. That's -358.6billion yen so far, which is more than 1/2 of what the gaming division has made to date. On top of that Sony is predicting no profit in the gaming sector until 2009. This is also not including the incumbrance the PS3 has placed on the PSP and PS2 hardware and software sales. On it's own the PS3 is bleeding hard.

 

[Carl B]

Thanks Karl. That's -358.6billion yen so far, which is more than 1/2 of what the gaming division has made to date. On top of that Sony is predicting no profit in the gaming sector until 2009. This is also not including the incumbrance the PS3 has placed on the PSP and PS2 hardware and software sales. On it's own the PS3 is bleeding hard.

It's important to note that they are referring to fiscal '09, which starts April 1st, 2008. Who knows how much they'll lose in the next six months, or whether next fiscal year will indeed be profitable. We'll see.

Anyway, listening to the conference call Q&A right now; the inventory write-down did actually include the current quarter price-cuts paid forward, which amounted to 71.1 billion yen of the present quarter loss.

PS - Carl with a 'C'!