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Sony FY 2008 Q2 Results Analysis SONY BLEEDING LOOKING BAD

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Not merely the Yen. It is the terrible WW economy compounded by the Yen.

 

bumidan said: Yes, the yen is a factor. but for this quarter ending sep 08 , the comparison is between a 115 vs 104 yen only.

Yes, and I'm saying since then it has gotten much worse.



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@ KatinJin

Agreed. Yen is worse now.

But let's see what is in store and make some projections (you can use your own numbers here

PS2 HW = 2 million @ $10 = $20
PSP HW = 5 million @ $8 = $40

PS2 SW = 20 million @ $2 = $40
PSP SW = 25 million @ $2 = $50
PS3 SW = 40 million @ $2 = $80

Total = $230 million
Less 10% currency(yen)

= $207 million

PS3 HW is the key
Sell = 4 million
Loss = ($60) per unit

Loss of ($240) milion

Then total income is ($33million) LOSS. obviously if u calculate PS3 losing less money, they would make money.

Last year, same quarter (holiday 2007) = they MADE US$113 million

(Those are just projections, but the net profit per item should be about the same)

So hopefully they make some money that quarter.
if they lose money still, it's hard to see how they can make any reasonable profit, given that the PS2 cash cow should end pretty soon.



TheSource said:

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.

 

 How do you do that, master?



DMeisterJ said:
You can add me Squillies!

DMeisterJ.

 

Can i add you to? Your Interesting! :P



While you guys mention a 10% drop of the dollar, there's something much worse going on. A 25% drop of the euro and larger drops for other currencies. The average drop is more like 20%.

Forget the gaming division. If Sony as a whole can pull a profit this quarter, it will be magical. Being generous and not taking lower sales into account, my numbers show a loss of at least $1.5 billion (of which at least $250 million will be in the gaming division). It could go up to $3 billion depending on how much they hedged currencies and some unknown factors.

The same method accurately predicted their Q2 drop in profits. I can post the calculations if anyone's interested.

 



My Mario Kart Wii friend code: 2707-1866-0957

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The key for Sony is how their *other* departments do this Xmas. I think games are the least of their worries, and might actually be their most resilient division.



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shams said:
The key for Sony is how their *other* departments do this Xmas. I think games are the least of their worries, and might actually be their most resilient division.


I agree, the gaming division is the least of their worries. They're going to be bleeding cash for the foreseeable future unless the dollar/euro/pound/etc recover. They have a $12 billion dollar cash reserve which doesn't last long with that kind of losses.

Sony's mission is to restructure around these circumstances. They have to do whatever they can to stay alive during the economic crisis.

 



My Mario Kart Wii friend code: 2707-1866-0957

Yes. Please do post your calculations.

Also, the original analysis is for the gaming division only - comparing to MSFT and Nintendo.

But yes, Sony as a whole, is in a bit of trouble right now, financially.

Their possible saving grace is either the GAMES (kinda unlikely) or MOVIES (if they get a big blockbuster or 2 in)

Their financial division will obviously bleed money as well.



@bumidan: If it's not very clear please ask.

Assume that 20% of their revenue is from Japan, and 80% from overseas (source).

There's this great tool to get historic exchange rates. The euro->yen dropped 6.6% from the end of 07Q2 to the end of 08Q2, while the dollar dropped around 7.8%. That gives us an average drop of 7.2% between the two currencies.

2007 Q2 revenue: 2083 billion yen
Sales increase in constant currencies: 5% (from the 08Q2 report), or 2187b yen revenue if currencies stayed constant.

20% of this revenue comes from Japan, or 437.4b. The 80% which comes from overseas drops to 1623.6b due to the 7.2% drop in overseas currencies. This gives us a total of 2061b yen, very close to the reported revenue in 08Q2 of 2072b yen. Close enough for me to have some trust that the revenue figures using this method aren't widely off.

Now let's apply this to the holiday quarter. Let's assume flat sales from last year (which is probably optimistic given the recession):

2007 Q3 revenue: 2859b yen
2007 Q3 profit: 200b yen
Drop in the dollar (from Q307 end to today): 15.2%
Drop in the euro (from Q307 end to today): 25.3%

Using the same method as above, we'd get expected revenue of about 2402b yen. Ignoring other factors (see note below), this would decrease their earnings from 200b profit to a 257b loss (calculated as 200-(2859-2402)). That's $2.7 billion.

Note: I know there are factors I'm not taking into account, such as currencies other than the dollar/euro, currency hedging and the recession. That's why I toned down the numbers I expect for losses during the quarter. The point is just to get a rough idea of what to expect, and leave the details to Sony's accountants.

 



My Mario Kart Wii friend code: 2707-1866-0957

That's good.

We'll wait till Jan 09 to get the holiday quarter.
But with the yen down, it may be entirely likely that the MORE PS3s they sell, THE MORE MONEY they may lose.

There may not be a PS2 to offset some of those PS3 losses...

though PSP hardware may be profitable enough to offset all those PS2 declines.

last year same quarter, they sold 4.9 million PS3s.
i think they are almost breaking even on the PS3s, so the quarter should still be profitable.

they made 12.9 billion yen or about 113 million US$ the last holiday quarter.

so they are in OK shape, even for this year I think.