Sony Financials Forecast: Bloomberg

[Carl B]

The past few years for the PS2, which should've been in the payoff part of its life cycle, have been very weak in earnings for a product with such marketshare.

The PS2 operation has not been so profitable.

The last couple of years are exactly the ones that have characterized the expense associated with the PS3 ramp to production though. If you go back three years or so, to 2003, 2004, and 2005, you see profits that were pretty decent in the context of the gaming divisions historical performance, and these were years where the majority of profit definitely stemmed from PS2 operations rather than PS1.

Avaya's posted chart above is good in illustrating how it takes some time within a product cycle to recoup investment, but in PS2's case I daresay they reached recoupment faster than expected. Now mind you that chart isn't about profits/losses within the division, but rather recoupment of investment related expenses before the returns on a prduct can be considered pure profit.

It's simply the case that the expenses associated with PS3 over the last couple of years have cut into PS2's earnings - but don't think for a moment that those earnings have been low.

Here's a copy of a post I did a couple of months ago:

(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.

 

[infinity4]

do you guys reckon sony will ever pay licence for rumble in sixaxis once sony gets in really profit making situation from ps3 + s/w sales???

 

[INKster]

INKster I still think you're confused.

It doesn't make sense to say the "losses would have been greater," because there are no losses. If you want to say "the profits would have been smaller," *that* would make sense.

Since profit declined due to internal policies, marketing and research, i count that as a loss.
They lost (a lot of) revenue compared to the previous year, right ?
Had Sony not included Blu-ray, and they could have done a massive launch in late 2005, instead of limited quantities in late 2006.
It would have been more akin to the PS2 launch, and the hardware would probably be on it's way to self sustained profitability by early 2008.

It's a different thing when you actually suffer a loss due to significant consumer retraction (from both Bravia, PS2, CE and Sony Pictures, among others), and that did not happen.