Sony FY 2008 Q2 Results – Analysis – SONY BLEEDING – LOOKING BAD

[bumidan]

IF WE KEPT THE SAME ASSUMPTIONS, then the Game Division should have made:

US$17(*) million

Clearly, that is totally different from a loss of U$379 million.

If we revise the profit/loss per unit of hardware or software, to reflect the currency fluctuation (I used 10%), then the results would be:

US$(14)(*) million (LOSS)

Again, that number is still way OFF.

That is using the PS3 Hardware Loss of $60 per UNIT still.

Therefore, the possible reasons are:


1. Our assumptions are WAY OFF. This is not likely, as it has predicted the past 2 quarters with relative accuracy.


2. Sony is bleeding money elsewhere like:

a) Marketing Expenses

b) Operating Expenses – such as FREE ONLINE play

c) Development Expenses – of unfinished or upcoming games, and things like HOME

c) all of the above

Either way, this is not looking very good. If the next quarter, the gaming division still loses money (Q3 2007 – made US$113 million), then there may be structural problems in the Gaming Division -- because the cost of the PS3 should keep going down still.

Meaning, all other units are not making as much money as before.

Discuss. If you have any questions, I will try to answer.
LET ME KNOW IF I MADE ANY MISTAKES.