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Sony Q2 FY 2011 Financial Results - 3.7M PS3s Ship, $350M Net Loss For Full Company

Aug 27, 2009
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AniHawk said:
the successor to the 360 won't come about due to microsoft's fears of slumping into third place, but their strategy of beating sony (and now many other companies) to the living room with one box that does everything.

Please don't mind me saying so, but that's archaic thinking. The battle for one box in the center of the living room is over, that's not happening. The new battle is being fought around services - one service that can be reached from any device anywhere.
 

Parmenides

Banned
May 9, 2006
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Sony Management Discusses F2Q 2011 Results - Earnings Call Transcript

Executives

-Masaru Kato – VP and CFO

-Kazuo Hirai – Corporate Executive Officer and Executive Deputy President


Analysts

-Kota Ezawa – Citigroup Global Markets

-Yuji Fujimori – Barclays Capital

-Yasuo Nakane – Deutsche Securities

-Eiichi Katayama – Merrill Lynch

Masaru Kato said:
First, I will explain the result of consumer product and service segments. CPS segment sales decreased 12%. This was primarily due to LCD TV sales price declines, resulting mainly from deterioration in market conditions in the West and unfavorable foreign exchange rates, as well as lower PC sales, reflecting price competition. Operating loss was ¥34.6 billion, compared to plus ¥1.0 billion in the same quarter last year. This decrease was driven primarily by deterioration in the cost of sales ratio and decreasing gross profit resulting from the decrease in sales, offset partially by decreasing restructuring changes. You can see positive and negative factors contributing to CPS segment.

Now, sales in the TV business decreased 17% to ¥213 billion, due to the price declines resulting from the deterioration of the operating environment. During the quarter, LCD TV unit sales were basically unchanged at 5 million units, although unit sales decreased significant in Japan, and also in Europe and North America. But unit sales in developing countries increased significantly.

Excluding restructuring charges, an operating loss was ¥41 billion, a deterioration of ¥25 billion. This was due to market price declines and fixed asset impairment. The impairment was ¥8.6 billion. Without it, loss would have been approximately ¥32 billion.

Next is the Game business.Game business sales, which include network service revenues,decreased year-on-year due to the strategic price reduction of PS3 hardware undertaken in August in advance of the year-end holiday selling season, and the PS2 business as a whole, which continues to have steady demand in developing countries, but has peaked out and is shrinking. PS3 hardware unit sales were 3.7 million units, the highest ever for the seven quarters since the launch of the product in 2006.

Operating income for Game business has decreased year-on-year. Although we continue to reduce the manufacturing costs of PS3 hardware, operating income decreased due to the change in the price of PS3 hardware. Customer expectations for the PlayStation Vita, which we will launch in December are very high. Sales of the PS3 have been strong due to the benefit of the change in price and the support of strong software sales. Going forward, several hit titles are scheduled to be released. We temporarily halted the PlayStation Network due to the unauthorized access incident. But since restarting the service, customers are again utilizing the service and results are trending favorably, as customers are purchasing a great deal of content, including new popular game titles.
 

flyinpiranha

Member
Aug 25, 2009
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REMEMBER CITADEL said:
Please don't mind me saying so, but that's archaic thinking. The battle for one box in the center of the living room is over, that's not happening. The new battle is being fought around services - one service that can be reached from any device anywhere.

I would disagree with the "any" device. I think everybody wants an "Apple" approach where you need a version of the same device (iPhone, iPad, iPod) to access your stuff. Not many hardware manufacturers are keen on the "any device" model.

It still really is a one-box living room strategy. Once that one box is planted you have to use their services.

I'm sure MS would rather have you watching Netflix on the Xbox than on the PS3.

The battle isn't over. There is always going to be a battle for whose device you use to access your universal content.

You have to remember, the group that owns a PC, a 360, a PS3, and a Wii is VERY small. Hell, the group that owns a PS3 and a 360 is extremely small in comparison to how many are out there. The services are universal already.

The battle for the living room wages on!
 
Aug 27, 2009
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flyinpiranha said:
I would disagree with the "any" device. I think everybody wants an "Apple" approach where you need a version of the same device (iPhone, iPad, iPod) to access your stuff. Not many hardware manufacturers are keen on the "any device" model.

It still really is a one-box living room strategy. Once that one box is planted you have to use their services.

I'm not sure what you're saying, that iPhone, iPad and iPod are all somehow one device? Or just that companies want to keep control over the devices used to access their services? The latter case makes sense, but whether they want to keep control or have an open approach is beside the point, it's just a means to getting you to use their service.

And I absolutely disagree that it's still a one device strategy, by now it's obvious to everyone, including Apple, that it's simply not happening. That's why you have all those different devices plus Apple TV and Apple computers. Many devices, one service network/access provider, that's the goal.
 

mambadragon

Banned
Jan 17, 2006
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REMEMBER CITADEL said:
I'm not sure what you're saying, that iPhone, iPad and iPod are all somehow one device? Or just that companies want to keep control over the devices used to access their services? The latter case makes sense, but whether they want to keep control or have an open approach is beside the point, it's just a means to getting you to use their service.

And I absolutely disagree that it's still a one device strategy, by now it's obvious to everyone, including Apple, that it's simply not happening. That's why you have all those different devices plus Apple TV and Apple computers. Many devices, one service network/access provider, that's the goal.
Yeah, its definitely less a device and more the services and the "ecosystem". MS wants you to have your Xbox that communicates with your Windows PC and Windows Phone 7 device. Sony is even crazier with the Playstation, Vita, Xperia, 3D TV, etc. They both strive for this where there customers have all of their devices where they can sell you content (the real money maker), and the only company where this actually happens for a significant number of consumers is Apple.
 
Aug 23, 2010
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guek said:
Sony posted another loss? Whoop de doo, Basil.

Sony is one of those companies I just don't really care for any more. I dislike their TVs, their computers, their cameras, and I really dislike the direction they went with the PS3. The PS2 was a great platform on really shitty hardware.

I guess I'd rather they fixed their internal problems and put out superior products though so here's to hoping they bring in some profits soon.

Yet they make the best TV's, the best Laptop computers, the best camera's and arguable have the best console on the market. I couldn't care less if Sony posted a loss as far as they keep on rolling quality product's, the main thing that is killing them is the premium price tag on their products (Which arguably are worth it).
 

TheOddOne

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Jan 13, 2008
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GTP_Daverytimes said:
Yet they make the best TV's, the best Laptop computers, the best camera's and arguable have the best console on the market. I couldn't care less if Sony posted a loss as far as they keep on rolling quality product's, the main thing that is killing them is the premium price tag on their products (Which arguably are worth it).
That's basically the only reason they aint making more loss.
 
Aug 23, 2010
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TheOddOne said:
That's basically the only reason they aint making more loss.

Sure but it is also driving people away, the only people that get away with such premium price tag are Apple. If you want to be competitive put out quality products for a reasonable price, i think Vita is a step in the right direction for Sony as a whole.
 

TheOddOne

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Jan 13, 2008
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GTP_Daverytimes said:
Sure but it is also driving people away, the only people that get away with such premium price tag are Apple. If you want to be competitive put out quality products for a reasonable price, i think Vita is a step in the right direction for Sony as a whole.
Totally understand this, but I doubt they will change this business model for the time being.
 

TheNatural

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Jun 23, 2010
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What I've learned from financial sentiment from media and even some posters:

Sony loses money for several years, with it's gaming division the most to blame for the overall amount: "Wow PS3 has caught up to 360 almost!"

Nintendo is likely to post the first loss in a year since the early 80's: "Nintendo is screwed!"

Why exactly are shareholders at Sony willing to put up with a gaming division that has lost a ton of money overall the past few years, and it's not called out by the press. Meanwhile Nintendo is in system transition with some pretty weak releases for about the past year, so they have the first fiscal year loss in a couple decades, yet they're doomed and should get out of handheld gaming and make $1 iPhone games.

It's funny how the press views this shit sometimes.
 

Takao

Banned
Mar 19, 2009
50,996
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Toronto, Canada
TheNatural said:
What I've learned from financial sentiment from media and even some posters:

Sony loses money for several years, with it's gaming division the most to blame for the overall amount: "Wow PS3 has caught up to 360 almost!"

Nintendo is likely to post the first loss in a year since the early 80's: "Nintendo is screwed!"

Why exactly are shareholders at Sony willing to put up with a gaming division that has lost a ton of money overall the past few years, and it's not called out by the press. Meanwhile Nintendo is in system transition with some pretty weak releases for about the past year, so they have the first fiscal year loss in a couple decades, yet they're doomed and should get out of handheld gaming and make $1 iPhone games.

It's funny how the press views this shit sometimes.

I'm guessing you missed all the 2007-2008 articles where basically outlet imaginable bashed on Sony? It was all PSP is dead, PS3 is dead, PS2 is a zombie, Wii king, Sony doomed, etc.
 

Kung Fu Grip

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Oct 5, 2010
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I don't know about the media, or some posters, but the only thing i care about is games. Yes i would love to see sony make money and profit. But at the end of the day its the games that should matter. And sony has been giving us that in droves. They basically released a game a month this year. What other company has done that?

Sony loses money, yes. But the fact is they're doing rather fine.

Edit- Thats true takao. It was depressing.
 

Abooie

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Sep 28, 2010
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Do we have an updated one of these anywhere?



Interested if Sony have actually officially made any money from the PS.
 

Stumpokapow

listen to the mad man
May 21, 2006
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The reason why there's no updated version is because both Microsoft and to a much greater extent Sony stashed their consoles in divisions that would significantly distort any data we put up.
 

Takao

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Mar 19, 2009
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As mentioned before, it's impossible to update that chart since Sony has combined gaming with other divisions in the same corporate umbrella.
 

Snakeyes

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Abooie said:
Do we have an updated one of these anywhere?



Interested if Sony have actually officially made any money from the PS.

This can't be right. According to the chart, Nintendo has made more money during the last generation despite Sony selling over 7 times more consoles.
 

Radec

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Sep 2, 2010
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Abooie said:
Do we have an updated one of these anywhere?



Interested if Sony have actually officially made any money from the PS.

How many hardware does Nintendo have during the PS2 era?
 

TheOddOne

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Jan 13, 2008
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Kung Fu Grip said:
I don't know about the media, or some posters, but the only thing i care about is games. Yes i would love to see sony make money and profit. But at the end of the day its the games that should matter. And sony has been giving us that in droves. They basically released a game a month this year. What other company has done that?

Sony loses money, yes. But the fact is they're doing rather fine.

Edit- Thats true takao. It was depressing.
Game wise nobody is gonna dispute that Sony is in game form. This is a sales thread, so it's not much about games but the current financial state they are in. You could debate that how much impact this will have on games in the long haul, I doubt much, but still it's a cause for concern.
 

Takao

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Mar 19, 2009
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Snakeyes said:
This can't be right. According to the chart, Nintendo has made more money during the last generation despite Sony selling over 7 times more consoles.

Nintendo's never sold hardware at a loss (well, until the 3DS price collapse), and they had the incredibly lucrative handheld market all to themselves.
 

M.D

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Feb 12, 2010
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Sony is just a weird ass company.
I wonder if they'll ever be able to fulfill their potential.
 

Stumpokapow

listen to the mad man
May 21, 2006
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Snakeyes said:
This can't be right. According to the chart, Nintendo has made more money during the last generation despite Sony selling over 7 times more consoles.

That's correct. Sony sold most of those consoles at a lost, and Nintendo had a very profitable handheld division at the same time which Sony didn't.
 
Aug 23, 2010
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Stumpokapow said:
The reason why there's no updated version is because both Microsoft and to a much greater extent Sony stashed their consoles in divisions that would significantly distort any data we put up.

Ahhh, that makes sense.
 

Not a Jellyfish

but I am a sheep
Sep 13, 2006
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24FrameDaVinci said:
Christ, will the 360's WW advantage be gone by this time next yr?


Yup but it won't matter...by this time next year the new next-gen arms race will have started.
 

Krauser Kat

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Dec 28, 2009
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Anyone mention the stong yen killing most japanese companies. I bet a huge part of that loss can account for that.
 

RaijinFY

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Krauser Kat said:
Anyone mention the stong yen killing most japanese companies. I bet a huge part of that loss can account for that.

What's going to happen if the dollar and/or the euro collapse?
 

Snakeyes

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Sep 20, 2009
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Stumpokapow said:
That's correct. Sony sold most of those consoles at a lost, and Nintendo had a very profitable handheld division at the same time which Sony didn't.

I'm baffled as to why Nintendo doesn't try overspending for a gen in order to regain the trust of the "core" gamers. With that much money they could easily make the Wii U into an affordable powerhouse AND buy every 3rd party IP that matters with just a small dent in their overall profit margins.
 

like a dragon

Banned
Dec 25, 2010
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Not a Jellyfish said:
Yup but it won't matter...by this time next year the new next-gen arms race will have started.

So? It doesn't mean the current generation consoles will stop selling. Its most likely the the PS3 will keep on selling like the PS2 which leads to more income and offsetting some of the r&d cost of the next gen console. Its a marathon after all and the race isn't over once the new consoles launches or if the other console manufacturers throw in the towel.
 

RustyNails

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Aug 31, 2009
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flyinpiranha said:
I would disagree with the "any" device. I think everybody wants an "Apple" approach where you need a version of the same device (iPhone, iPad, iPod) to access your stuff. Not many hardware manufacturers are keen on the "any device" model.

It still really is a one-box living room strategy. Once that one box is planted you have to use their services.

I'm sure MS would rather have you watching Netflix on the Xbox than on the PS3.

The battle isn't over. There is always going to be a battle for whose device you use to access your universal content.

You have to remember, the group that owns a PC, a 360, a PS3, and a Wii is VERY small. Hell, the group that owns a PS3 and a 360 is extremely small in comparison to how many are out there. The services are universal already.

The battle for the living room wages on!
If you think about it, Sony's strategy aligns with Apple's in this department. The "Playtation" family, if you will is analogous to "i" devices from Apple.
 

Psychotext

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Jun 15, 2007
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like a dragon said:
So? It doesn't mean the current generation consoles will stop selling. Its most likely the the PS3 will keep on selling like the PS2.
Probably not. It'll keep selling no doubt, but it's unlikely to suddenly sell like the PS2 (in terms of sales or legs) when it hasn't managed it all gen so far.
 

Zoe

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Jan 3, 2007
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Austin
TheNatural said:
What I've learned from financial sentiment from media and even some posters:

Sony loses money for several years, with it's gaming division the most to blame for the overall amount: "Wow PS3 has caught up to 360 almost!"

Nintendo is likely to post the first loss in a year since the early 80's: "Nintendo is screwed!"

Why exactly are shareholders at Sony willing to put up with a gaming division that has lost a ton of money overall the past few years, and it's not called out by the press. Meanwhile Nintendo is in system transition with some pretty weak releases for about the past year, so they have the first fiscal year loss in a couple decades, yet they're doomed and should get out of handheld gaming and make $1 iPhone games.

It's funny how the press views this shit sometimes.

Because all Nintendo has is their games/consoles and licensing.
 

like a dragon

Banned
Dec 25, 2010
52
0
0
Psychotext,

It will sell for probably another 3-4 years.

1- Ps3 hasn't reached $199 yet

2- A huge segment of the demographic wont jump in to next generation immediately unless they reach mass market price. Unless of course the next generation consoles are priced at $199 , give them 2 to 3 year to jump in.

3- first gen software sucks usually and aren't compelling enough to pull in the non hardcore early adopters.

4- Momentum. The PS3 is not slowing down.
 

muu

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Mar 20, 2011
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Parmenides said:

Mindboggling Q&A sessions. Kaz needs to learn to be succinct and to the point, maybe even answer the question once in a while instead of waffling about and hoping they give up. At least it's not as bad as the Japanese version where he randomly throws in buzzwords in english to either throw off the questioner, make things sound grander than it is, or both.
 

guek

Banned
Apr 27, 2011
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Zoe said:
Because all Nintendo has is their games/consoles and licensing.
But all Sony has is a wide range of high end electronics, a movie studio, and a music studio

...and they've sucked at making those profitable for the last decade.


Sony can "afford" to bleed more but that doesn't mean they're in a more healthy place than nintendo. They're dying by inches. It's all reversible, sure, but man do they currently suck at making money.
 

ClosingADoor

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Apr 6, 2009
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Snakeyes said:
I'm baffled as to why Nintendo doesn't try overspending for a gen in order to regain the trust of the "core" gamers. With that much money they could easily make the Wii U into an affordable powerhouse AND buy every 3rd party IP that matters with just a small dent in their overall profit margins.
What would be the use of that? They can do that a generation and the next gen they can lose all that goodwill in a year. Look at Sony a few years back.

And they are losing money on the 3DS now, while making games their fans want (Ocarina remake, Mario 3D Land, new Mario Kart, etc). Unless of course you mean that Nintendo should hire some studios to make games like COD and Halo, which would be very hard for them in the current marketplace. Look at Killzone and Resistance, made by very good developers, but failed to reach that level.
 

guek

Banned
Apr 27, 2011
18,685
0
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Snakeyes said:
I'm baffled as to why Nintendo doesn't try overspending for a gen in order to regain the trust of the "core" gamers. With that much money they could easily make the Wii U into an affordable powerhouse AND buy every 3rd party IP that matters with just a small dent in their overall profit margins.

That's way too big of a gamble. What if it doesn't work? What then? As big of a risk the wii and DS were, they never put their company in financial jeopardy. Nintendo has always been a company that thinks long term. That's why they've survived for so long.
 

Snakeyes

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Sep 20, 2009
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ClosingADoor said:
What would be the use of that?

Mindshare and consumer trust. They can go all out one gen and dominate like the PS2 did, give a taste of some of the best designed franchises in gaming to the bros and then become slightly more conservative than the other two afterwards. Their goal should be to make the Wii U into a lifestyle gaming device for the non-gamers (just like its predecessor) that also offers everything the casual and hardcore need.

They can do that a generation and the next gen they can lose all that goodwill in a year. Look at Sony a few years back.

The downfall of the PS3 was caused by convoluted hardware design that resulted in a price point that was too high for the mass market. Even then, I'd argue that the PS3's total sales are a result of the PS2's popularity because it shouldn't be so close to the 360 in sales considering the many things Microsoft did right this gen. Most of my casual (dudebro) gamer friends bought PS3s early just because it's a Playstation. They weren't even aware of the platform's killer-apps like MGS4, Killzone or the then-exclusive FFXIII.

I also hate to bring up the "no gaems" argument, but imagine what would've happened if say, SE had released (a good) Final Fantasy XIII roughly a year after the PS3's launch, just like they did for X on the PS2. It would've been a completely different story.
 

jman2050

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May 18, 2005
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Snakeyes said:
I'm baffled as to why Nintendo doesn't try overspending for a gen in order to regain the trust of the "core" gamers. With that much money they could easily make the Wii U into an affordable powerhouse AND buy every 3rd party IP that matters with just a small dent in their overall profit margins.

Because if they fail then Nintendo just wasted billions of dollars that they didn't have to.

Kind of like what Sony just did this past gen.

Not that being ultra-conservative is necessarily a good thing either, but that's another argument.
 

spwolf

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Feb 15, 2007
16,282
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RaijinFY said:
What's going to happen if the dollar and/or the euro collapse?

most of the bad results are from Euro losing 13% and USD losing 8% against Yen in just last quarter alone. Now multiply that against their US and Euro revenue to see how affected they were (much more than the loss).
 

bigtroyjon

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Oct 25, 2007
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spwolf said:
most of the bad results are from Euro losing 13% and USD losing 8% against Yen in just last quarter alone. Now multiply that against their US and Euro revenue to see how affected they were (much more than the loss).
They have an even amount of expenses/revenue when it comes to the dollar so the USD falling doesn't harm their profits. Euro hurts but the biggest reason for the loss was the restructuring of the tv division.

Restructuring charges in the current quarter include an asset impairment charge of 18.4 billion yen (239 million U.S. dollars) incurred in association with the anticipated sale of the small- and medium-sized display business in the Professional, Device & Solutions segment.

The 8.6 billion yen (112 million U.S. dollars) asset impairment, a non-cash charge recorded within operating results, primarily reflects a decrease in the estimated fair value of long-lived assets associated with the LCD television asset group.

Both of those add up to $351 million and they lost $350 million. TV's are their biggest issue by far.
 

Road

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Jan 21, 2008
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guek said:
But all Sony has is a wide range of high end electronics, a movie studio, and a music studio

...and they've sucked at making those profitable for the last decade.


Sony can "afford" to bleed more but that doesn't mean they're in a more healthy place than nintendo. They're dying by inches. It's all reversible, sure, but man do they currently suck at making money.
Pictures and Music are profitable (have always been, in fact). Financial Services has only ended in the red one year in the last 10 years.

It's the whole electronic business (including the Sony Ericsson side) that is mess. A mess that apparently isn't going to stop being a mess any time soon.
 

guek

Banned
Apr 27, 2011
18,685
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Road said:
Pictures and Music are profitable (have always been, in fact). Financial Services has only ended in the red one year in the last 10 years.

It's the whole electronic business (including the Sony Ericsson side) that is mess. A mess that apparently isn't going to stop being a mess any time soon.

I'm not 100% certain about Sony BMG but I thought profits for sony pictures were pretty thin and, more importantly, an unreliable and erratic source of revenue
 

Takao

Banned
Mar 19, 2009
50,996
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Toronto, Canada
guek said:
I'm not 100% certain about Sony BMG but I thought profits for sony pictures were pretty thin and, more importantly, an unreliable and erratic source of revenue

That seems to be the nature of the film business.
 

flyinpiranha

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Aug 25, 2009
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REMEMBER CITADEL said:
I'm not sure what you're saying, that iPhone, iPad and iPod are all somehow one device? Or just that companies want to keep control over the devices used to access their services? The latter case makes sense, but whether they want to keep control or have an open approach is beside the point, it's just a means to getting you to use their service.

And I absolutely disagree that it's still a one device strategy, by now it's obvious to everyone, including Apple, that it's simply not happening. That's why you have all those different devices plus Apple TV and Apple computers. Many devices, one service network/access provider, that's the goal.

I get that. But it still is a strong battle for the "living room". People don't have multiple gaming systems for the most part, if these "services" are coming in through a gaming device they want it to be theirs.

Just because there are different devices doesn't mean they aren't pushing for it. Of all those services that are on the 360 Zune is the only one they outright own. The others are just bullet points and they might get a kickback ... but I don't know the financials.

All I know is this IS a battle to see who is the manufacturer to get you games into the living room and with that the piggyback of all these services (which one is the primary I have no idea)

I'm not saying an all encompassing "everything" device where it's just one big box in the living room. It's more compartmentalized than that. But they want whatever device you are gaming on to be their ONE device that they offer.

We're talking about consoles here, and how they are evolving. In fact the services and such that are being added to the consoles are making them all-in-one miracle boxes more-so than they have ever been.

You say it's not about the box anymore, but isn't that exactly why they add these services is so you choose their box over their competitors?

Inter-connectivity and access to your 'services' is a moot point because the hardware manufacturers know that they need their box in your living room. MS doesn't give a shit if you have a Facebook account, Hulu+, or Netflix, they care that you are using their box to access them.

And with Windows Phone+PC+Xbox, and PS3+Vita ... all it has done is made it more enticing to buy their boxes. Instead of a 1 miracle box, they just want you to buy 3.

And for the record, I don't disagree that it also about services. But there needs to be a way to access them and they want the control of that. To say that it's just about services at this point doesn't make any sense.