Sony's Corporate liabilities exceed $100 Billion - much like other large companies

[JPT]

Sony's debt was $60 Billion only three years ago, but the debt increased by $40 Billion since the launch of PSX3 and the Blu-Ray format war.

Yes, but what about expected future revenue based on Blu-Ray and PS software etc? Those numbers probably offset each other in some way that finance people like.
But the easiest thing is to check what the financial world thinks of Sony, do they suggest you sell out, buy up or stick with it?

As long as they can with their revenue manage their debt and the banks are not worried, I guess they are like most other larger corporations in the world.

 

[tha_con]

I couldn't care less. As a gamer, my interest in finance / sales data is minimal.

The only concern I have is that they stay in business. Nothing more, nothing less.

 

[Freak'n Big Panda]

well the finance side of things has a direct relationship with the games and hardware that does end up getting produced. Typically if companies are doing better they will be more ambitious (see sony w/ the ps3)

 

[tha_con]

well the finance side of things has a direct relationship with the games and hardware that does end up getting produced. Typically if companies are doing better they will be more ambitious (see sony w/ the ps3)

Sony is not doing better, yet they are still extremely ambitious. Honestly, they've put out some of the greatest software of this generation, almost none of which is selling like gang busters.

The financially 'sound' publishers, like Activision, are taking few risks, and publishing some really mediocre games.

Then you've got EA, who tried to do some great stuff, and succeeded, but apparently is going to give up because of lack luster sales.

It doesn't matter, honestly, how much money is being thrown around. The quality of games from Sony hasn't changed since the late PS2 era.

 

[dantruon]

http://www.sony.co.jp/SonyInfo/IR/library/8ido180000026man-att/h21_q1.pdf

Sony's total debt as of June 30th, 2009 was 9,121,923,000,000 Yen.

In today's exchange rate, that's $100.9432 billion dollars

If I were you I wouldn't be worrying about Sony debt right now. By 2011 the USA will have a $10 trillion public debt, 67% of GDP- the highest in the world, that figure would halt US growth for a decade.

http://buttonwood.economist.com/content/gdc?source=hptextfeature

 

[Silent_Buddha]

Well it sure isn't pretty at the moment.

Sony's relevant financials for the past 12 months...

Income: -1.89 billion
Sales growth: -12.90%
Income growth: -206.00%
Net profit margin: -2.27%

Having a negative net profit margin is a killer. They can't make back the cost of manufacturing for goods which is then compounded since they'll obviously not be able recoup the losses for marketting, administration, building maintenance costs, interest on debt, etc... Basically once you hit negative margins you're losses start to snowball.

But none of that is reason to panic yet although some financial institutions have Sony on critical watch.

That said, this holiday season is going to be a fairly important one for Sony, they'll need to show some sign that they are recovering.

The PS3 Slim will help but that product is still a drop in the bucket of the entire Sony holdings.

Regards,
SB

 

[Acert93]

Then you've got EA, who tried to do some great stuff, and succeeded, but apparently is going to give up because of lack luster sales.

They started to slide first, though, and when you tarnish your franchises it is a tough hole to crawl out of. They will blame trying to be innovative and trying new things, but the heart of the issue was riding franchise value into the ground first and not executing well at the generational transition.

 

[Carl B]

This thread... is... ugh.

First of all as has been mentioned the ~$100B figure isn't a debt number but a total liabilities number; the logical counter to that is that the net assets are listed as ~$134B. Both figures are meaningless for any real purposes other than to establish solvency/insolvency.

Sony has been profitable every year of its existence save for the most recent year... where I don't think it can really be wholly blamed for the global sales and currency environment it has encountered. Debt is relevant insofar as it figures into the cost of debt servicing; which is to say, previous years it has not been an issue, because after servicing debt they have been profitable. This past year, well, it's been a rough ride for many.

All of this is completely independent from this "$100B debt" notion of course, as their total long-term debt is line-itemed at like ~$7B or something, with total debt period at roughly ~$12.5B.

Incidently the linkage in the OP to Japanese figures is a total red herring move, making it seem falsely more valid and alarmist at the same time. Sony reports in the US folks, no need to decipher Japanese accounting when you can find the same in English with greater clarity at the same time. Just look up the balance sheet info for SNE.

Texan this thread I have to say... try to control yourself. Because it's so blatantly baiting it should be locked honestly, but who knows maybe it'll go somewhere constructive. I really would love to lock it though!

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On the side, post #27, besides being off topic, is also incorrect as Japan has a public debt 175%+ of GDP, and last I checked they belonged to our 'world.'

But seriously, for non-console or console business discussion, general discussion and RPSC forums are here for a reason.

 

[obonicus]

Carl, quick google says that Sony posted first loss in 14 years, not ever. Toyota posted the first loss in its lifetime this year. Are you sure you didn't get the two confused? Still, 14 years without a loss is still a big deal.

 

[Carl B]

I don't think I got the two confused so much as I was just going off of memory... incorrectly in that case!

But, the point as it relates to debt servicing, profitability, etc etc was the core of the sentiment.

 

[obonicus]

I don't think I got the two confused so much as I was just going off of memory... incorrectly in that case!

But, the point as it relates to debt servicing, profitability, etc etc was the core of the sentiment.

Right, just making sure in case you knew something over what Google did.

 

[dobwal]

All of this is completely independent from this "$100B debt" notion of course, as their total long-term debt is line-itemed at like ~$7B or something, with total debt period at roughly ~$12.5B.

In reference to Sony's debt.

42 billion USD in current liabilities
54.5 billion USD in long term liabilities

Sony has 135 billion in assets if its debt was as low as 12.5 billion, Sony market cap would be alot higher than 30 billion. Its share price would be in the $100 range not in the $30 dollar range. Sony is about 100 billion in debt but even in good times (pre PS3) their level of debt ranged in the 60-70 billion area.

Sony's debt is manageable, but they do need for the economy to improve and pay down some of that debt. I think the aspect of debt would be better served with question of how this will affect Sony short term (PS3) as well as long term (PS4) when it comes to PC and Game division and not will this kill Sony.

 

[Carl B]

In reference to Sony's debt.

42 billion USD in current liabilities
54.5 billion USD in long term liabilities

Sony has 135 billion in assets if its debt was as low as 12.5 billion, Sony market cap would be alot higher than 30 billion. Its share price would be in the $100 range not in the $30 dollar range. Sony is about 100 billion in debt but even in good times (pre PS3) their level of debt ranged in the 60-70 billion area.

You're quoting liabilities, not debt, and using the terms interchangeably (which I gather because you end your post with 60-70 billion 'debt.')

Liabilities are *not* the same as debt - how does this notion promulgate? This is verbatim from their financials:

Short Term Debt - 4,567.73 (so $4.5B)

Long Term Debt - 6,683.68 ($6.6B)

That's that. If we're going to talk about 'debt,' that's the debt. Sony carries their insurance/banking arms' numbers on their balance sheet, which is a *huge* part of the assets and liabilities we see play out here on the balance sheet, and is completely the norm for a financial institution. Other liabilities and assets include accounts receivable/payable, pension burdens/overages (burden in this case), etc etc. Some of them have an effect on the future, but they do not fall under the traditional debt servicing aspect that one talks about when they are talking 'debt.' It's debt servicing we are - or should be - concerned about here, because it's that day to day, month to month servicing that impacts earnings on a normal basis.

I don't think stock prices are a conversation worth having either - no one can say what a company should or should not be worth; the best one can do is look at an industry, derive historical valuation norms and give it a go. Even then, forward-looking performance has so much more to do with it than the balance sheet itself at any given point in time. To whit: if I were going to be using Sony's stock price as a factor in this argument, I would say it's up roughly 100% since March and say - "they must be doing well!" But that would be disingenuous of me, because they were artificially low due to global tumult to begin with, and their recovery was bound to occur. But so to is it that I say... let's not bother to try and derive sense from stock price figures and say that it is an indicator of anything other than the whimsy of the market at any given time. Sony is going through a tough period, their profitss are down, currency plays are against them - that's why the stock is valued as it is, not because of their liabilities vs assets. As the balance sheet goes, watchers would like a stronger cash position for the reason that they don't want Sony having to issue debt/raise cash in an environment that has been hostile to such moves of late, though it's gotten better recently.

ExxonMobile has ~$115B in liabilities. They are the most profitable company in the world in absolute terms unless I'm mistaken. They have ~$9.5B in debt. Do people see the difference between debt and liabilities? Liabilities does not equal money you owe to a bondholder, and assets do not equal cash you have in the bank. Cash equals cash, debt equals debt.

 

[Silent_Buddha]

Yeah, I still don't know how/why people confuse Liability with debt.

Debt is part of your liability, that's about it.

Regards,
SB

 

[Rangers]

In reference to Sony's debt.


Sony's debt is manageable, but they do need for the economy to improve and pay down some of that debt. I think the aspect of debt would be better served with question of how this will affect Sony short term (PS3) as well as long term (PS4) when it comes to PC and Game division and not will this kill Sony.

The one thing I think it's relevant too is how much they have to spend on PS4.

I dont think anywhere near the expense of PS3 will ever happen again for them.

Then again it was mostly the one time expense of Blu Ray that made PS3 so expensive.

 

[Cheezdoodles]

What the point of this thread? All you the first poster does is state the level of liabilities. Seem more like baiting for trolls than the thread starter wanting to actually have a constructive discussion about anything..

Sony's debt is perfectly manageable (Hence A3 ratings), Debt by it self is not a bad thing, reduces cost of capital and reduces tax obligations.

Sony has 135 billion in assets if its debt was as low as 12.5 billion, Sony market cap would be alot higher than 30 billion. Its share price would be in the $100 range not in the $30 dollar range. Sony is about 100 billion in debt but even in good times (pre PS3) their level of debt ranged in the 60-70 billion area.
.

Lol. Assets to debt ratio says absolutely nothing about marked value. Book values are just book values, they are worthless for everything even when you want to liquify a company.

As im sure you know, market value of a company is driven by completely different things than asset\debt ratio. While lower debt for a semi-distressed company will obviously raise value, higher debt can actually raise marked value aswell, if the company is not in distress.

Sony could have financed themselves by issuing equity only, and in all cases except for when company has a very bad outlook on the future, this would do nothing to increase firm value compared to a company with debt financing. Infact it could even decrease company value.

 

[Shifty Geezer]

Texan this thread I have to say... try to control yourself. Because it's so blatantly baiting it should be locked honestly, but who knows maybe it'll go somewhere constructive.

I was waiting for you to show up! The thread, despite its obvious connotations, has led to an education in high-level figure reading. Who says you can't turn a sow's ear into a silk purse?

 

[eastmen]

Yes, but what about expected future revenue based on Blu-Ray and PS software etc? Those numbers probably offset each other in some way that finance people like.
But the easiest thing is to check what the financial world thinks of Sony, do they suggest you sell out, buy up or stick with it?

As long as they can with their revenue manage their debt and the banks are not worried, I guess they are like most other larger corporations in the world.

I don't think PS software is going to be enough to make up for the losses. At least not in the ps3 generation. If a replacement comes out in 2012 as predicted that leaves them with a little over 2 years to make up the losses on the ps3. I highly doubt the ps3 will more than double the current install base of 20m so that puts them in the 40m range . I don't think that will do it.

Blu ray might do it , who knows though.

 

[Sonic]

I don't think PS software is going to be enough to make up for the losses. At least not in the ps3 generation. If a replacement comes out in 2012 as predicted that leaves them with a little over 2 years to make up the losses on the ps3. I highly doubt the ps3 will more than double the current install base of 20m so that puts them in the 40m range . I don't think that will do it.

Blu ray might do it , who knows though.

I expect them to triple it by 2013. Especially if they can knock off another $100.

 

[Silent_Buddha]

OK, first thing. The PS3/PS4/whatever console isn't going to be the savior of Sony Corp. Even if PS3 sales suddenly increased 500% and stayed that way, it's not going to be enough unless other Sony divisions also turn around.

Granted, its human nature to just focus on the part that's in front of you, but Sony is far more than a console company.

Depending on how the different divisions do, it's possible that PS3 could end up very profitable and the company could still end up losing a billion USD a year.

And the flip side the PS3 could end up as a huge money sink/loss and Sony Corp could end up making a few hundred million USD a year.

So something like expecting PS3 to make up the losses is nonsensical without considering the rest of the corporation.

In the same way you can't say Sony is doing horribly due to the PS3, you can't claim PS3 will save the company. They still have to account for the Electronics products, computing products (now in the same group as consoles I believe?), Sony Music, Sony Films, Sony Banking, etc...

Regards,
SB