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

Hello All.  This is a continuation of previous Sony threads.

The most recent one being:

http://www.vgchartz.com/forum/thread.php?id=35785\

The above thread, the summary were as follows:

Given these assumptions of NET PROFIT/(LOSS) per item:

PS2 HW = 2.15 million @ $10(*) net profit

PSP HW = 3.65 million @ $8(*) net profit

PS3 HW = 2.5 million @ loss of $60(*) per unit

PS2 SW = 21.5 million @ $2(*) profit

PSP SW = 16.0 million @ $2(*) profit

PS3 SW = 19.5 million @ $2(*) profit

Our model showed a variance of about $8 million or about 16%, which I FELT, was FAIRLY ACCURATE, given that we really don’t have much data.

(All these numbers were based on even earlier works)

CON'T...

We now have Sony’s latest numbers from the Game Division:

FY 2008 Q2 (US$)

Revenue = 2,582
Income = (379) (loss)

What has changed?

Currency went up from 115 per US$ to 104 per US$ - a 9% difference – on the negative side, in terms of US$ results

Based on Sony’s statements, revenue increase and operating loss decreased due to:

“PS3 hardware cost reductions, increased sales of PS3 software and strong sales of PSP hardware…” --- note that they are comparing it to the same quarter (Sep 2007), as opposed to the most recent quarter (Jun 2008)

According to their results:

PS2 HW = 2.5 million
PSP HW = 3.18 million
PS3 HW = 2.43 million

PS2 SW = 23.1 million
PSP SW = 11.8 million
PS3 SW = 21.1 million

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.

These posts are probably better suited for the stickied thread with quarterly shipment results from the big three so that people who have all the information, and are interested in it, can determine whether you are a prophet or a fool.

The development expenses of the PSP 3000 could have been lumped into that quarter (even though the development might have extended back further, the sum of the costs may be counted only in this quarter)

they last reported at 104 yen per dollar, but it is actually 95 yen per dollar now so things are even worse then they were at this point.

I think a huge chunk of the money this quarter would have gone to marketing, since the amount of ps3 and ps3 games advertisement increased.

Amazing, if you did make any mistakes I wouldn't be the one that would be able to tell you. I was clear and concise as I've ever seen.

This is for Q2... which for Sony was July through September.

Now my statement holds no meaning.