Sony expects full-year losses to reach ¥220 billion

PlayStation business losses increase to ¥85.7 billion in Q3

Sony's Consumer Products and Services division, the unit that includes the PlayStation business, has suffered an operating loss of ¥85.7 billion ($1.09 billion) for the third quarter, compared to a profit of ¥63.5 billion for the same period last year.

Sales were down 24 per cent from ¥1.3 trillion to ¥996.5 billion ($12.7 billion) due to a price reduction on the PlayStation 3 and marketing costs that exceeded expectations, the company said. The division was also hit by declining sales of LCD televisions, the impact of floods in Thailand and unfavourable exchange rates.

Sales for the Sony Corporation overall were ¥1.82 trillion ($23.37 billion), down 17.4 per cent due, again to the floods in Thailand, "deterioration in market conditions" and the impact of foreign exchange rates.

The company recorded a net loss of ¥159 billion ($2 billion) compared to a profit of ¥72.3 billion for the same quarter in the previous year.

Sony has now increased full-year loss forecasts from ¥90 billion to ¥220 billion ($2.9 billion), with the company expected to make a loss for the fourth year in a row.

The numbers highlights the challenge facing new president and CEO Kaz Hirai, a veteran of the PlayStation business, who is now charged with turning around the manufacturer as it sees an eighth consecutive year of losses in its TV business.

During the third quarter Sony sold 6.5 million PlayStation 3 units, 2.4 million PSPs and 900,000 PlayStation 2 units.

It sold 66.2 million PlayStation 3 games, 11.4 PSP titles and 2.5 million games for the PS2.

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Latest comments (11)

2011 has been a challeniging time for japanese companies. Earthquakes, flooding, fire and the strong yen are all force multipliers that truly damoen the Japanese growth significantly. Whilst it is tricky to figure out the percentage breakdown resulting of the natural disasters or unforseen events, analysis of this could help factor in Sonys growth relative ot other companies in comparison

All in all, Kaz has the greatest challenge now to steer this behemoth ship towards brighter shores
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gi biz ;, 9 years ago
You forgot the loss of confidence after the massive hacker attack and how it was managed by Sony.
Incredibly enough, if you try to subscribe to the PSP online they force you to give your credit card number, although there is nothing to pay. That is, you can subscribe but in order to register your PSP (which is needed if you want your account to have some use) you *must* give the credit card. Or at least I couldn't find any way around that after 30 minutes trying.

Weird company polices make them look completely unaware of the world around them.
Take the lack of support for audio file formats other than MP3, they've ignored their community asking for ogg/flac support for years now, in spite of the failure of SonicStage and their atrac format.
Surely natural disasters had a negative impact on Japanese industries, but such a big loss can only be explained as a loss of fans in your community. Sony needs to wake up in my opinion.
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I thought EA losing $200m in the 3rd (i.e. the best!) qrt was bad, but Sony losing $2bn in this quarter...

Seems so typical of capitialistic companies these days... post $20bn revenue in the qrt ... and lose $2bn.

Forget about THQ everyone, start worrying about Sony. There aint nothing positive coming up here...
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Show all comments (11)
Tamir Ibrahim Programmer, Splash Damage9 years ago
I highly doubt the general public care that only the mp3 format is supported, as the vast majority of people only use mp3.

I also seriously doubt the impact the hacker attack has had as it's been reported PSN numbers are actually up from before the attack not less.

Also the Playstation business is only a small part of the big picture. I don't have the report on me but I seem to remember reading that the Playstation business, if taken on it's own, is actually returning profit (note: I may be mistaken). It's the rest of the company (specifically the TV section) that is seriously losing money.
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Tamir is right - the PSN biz is doing well, the hardware and TV sales are suffering (there are only so many TVs, 3D TVs and such that people can afford in recession - which tends to be more about food, energy, fuel - because of diminishing takehome pay = probably due to various govts tightening teh screws via direct/indirect taxation..)
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Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.9 years ago
Yen appreciated - ¥20 billion Yen ($262 million)
Thailand Floods - ¥45 billion Yen ($591 million)
Total - ¥65 billion Yen ($853 million)

These are things Sony couldn't control. But that still leaves (¥220 billion - ¥65 billion) ¥155 billion ($2 billion) in losses directly attributable to Sony.

And it looks like the PlayStation division took losses too.
Operating loss of 85.7 billion yen (1,099 million U.S. dollars) was recorded, compared to operating income of 63.5 billion yen in the same quarter of the previous fiscal year. This was primarily due to:

(6) and the game business, reflecting higher marketing costs to promote network service platforms and lower sales of PlayStation®3 hardware due to a strategic price reduction.

Good luck, Kaz. You've been handed a very tough road to traverse.
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Hardware:What would be useful is a all in one device/interface between the various Sony products.

I'm not sure if the Xperia is the thing.

Essentially, Kax has
- the Sony TV (would it have built in PS2/3?)
- Profits to be had with PS3 +3D module
- How to get the Vita as a PS3 potable on the go, and afford a stopgap of titles in between PS3 core titles, will be interesting

- Sony used to have some of the best phone cameras, can it outperform the ipad + software?
- The Walkman used to dominate the music scene, but now with the ipods/iphone all in ones, it is tough to climb back
- The headphones are semi decent as well, if they could sort out the thin cabling (or a way to stop cabling becoming entangled) that would be awesome!

- All in all, Sony are still some of the best R&D tech pioneers, however with the ongoing challenges, trying to ensure a clear 5-10 year strategy is probably what Kaz in store
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Klaus Preisinger Freelance Writing 9 years ago
Nobody can dispute the quality hardware Sony is producing. But this is a software world, a world driven by services, a world driven by money being made beyond the initial sale.

Apple not only makes off selling a phone, but makes money off every purchase on that phone. Apple does that with all their products. Sony might make a phone just as good, but Android is not making them money. Same for tablets, same for PCs, same for anything, except the PS3. That is the last platform on which Sony makes money beyond the initial sale.

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@Klaus: Apple makes money by selling a device that costs them $100-$200 to make for $400-$600, and then selling 30m of them in the qrt. The software and service components are almost irrelevant. And by selling phones, a lot of them are on contract - and the consumer virtually gets them for free on day#1.

Its a tough model to compete against... consumers won't practice the same behaviour for other devices (usually) just phones - everyone is used to it. And then there are iPads, iTouches, ...
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Klaus Preisinger Freelance Writing 9 years ago
go to any electronics store in Germany and you can finance any Sony product at 0% interest. You do not even have to buy an expensive contract subsidizing the hardware. If you want, you can have your Sony hardware for a monthly fee, the same way you get your iPhone for a monthly fee.

Sony's margin on their product is not larger or smaller than Apple's. Ok, a bit smaller, but that does not make the difference between billions earned and billions lost. The problem is not Sony selling as much units as Apple but earning less. Their problem is not selling enough units in the first place.

Which leaves us with the argument as to what makes an Apple product more desirable than a Sony product. If anything, Sony does more advertisement, at best there is inefficiency to blame here. There is design, although quite frankly, Apple does not have design beyond small, smaller, flat, flatter, shiny, shinier. Personally, it is in the software. There is something about Apple software that even the biggest digital illiterates can wield it. Which is not something you can say about all Sony products. For me, this factor is the one more important than design and advertisement. I like listening to podcast while driving in my car, Android just does not cut it, when it comes to comparing to "update all podcasts" on iTunes. While iOS has many many things I hate about it, (such as weird behavior with ICMP and SSL, no convenient access to the file system, lower resolution screen) nobody really has a package better than Apple.
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gi biz ;, 9 years ago
@Tamir: I recall different threads on Sony forums about this. Besides, most Sony devices can't even read MP3, only their atrac format, and this is a common complaint.

I wasn't speaking about consoles specifically. The memory stick is another issue that makes people think twice: Sony seems to prefer it for all of their devices when SD cards are cheaper and have better support and compatibility. Imo, if you start getting a bad reputation on your name all of your product will sell less.
Most people "unaware of ogg/flac" (aka the category of people that can't tell the difference between a product or the other) are likely to ask friends or sellers for their advice, so those persons are the key figures.

About TVs, I'm not really into this field, but from what I see in the stores everything is going 3D now and most people just don't care about it.

Edited 1 times. Last edit by gi biz on 3rd February 2012 10:47am

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