Sony Game Division – Concerns and Challenges Moving Forward

[bumidan]

@DMeister J

From doing some reseach Danger was purchased for about $500 million in CASH.

The only mention of expenses so far about it was the $24 million in R&D costs.

I think the closing started in April 2008 - so Danger had only about 3 months worth of revenue and expenses associated with the EDD division.

Again, doing some quick research, I think FY end Sep 2007 or something like that, Danger's revenues were only $50 million + and losses were about $25 to $30 million.

Therefore if you do some very quick extrapolation, with some revenue growth - let's assume even 50% revenue growth.

Then approx. $50 million x 1.5 = $75 million revenue
divided it by 4 (4 quarters)
Then Danger roughly approx. had a revenue of $19million in the EDD division for the quarter.
For losses, lets also just quickly assume that they lost $10 to $20 million in the quarter.

If we take the $500 million and lets say amortize for 10 years - then amortization = $50 million per year OR about $12.5 million per quarter.

Clearly, while $500 million in this example is a huge number, in terms of revenue and profit, it is quite small in relation to the $8 Billion in Revenue that the EDD division had.

Of course if Danger suddenly explodes and have revenues of $500 to $1Billion, then that would be significant.

As it is, it has barely an impact in the overall financial picture.

I hope that explains a little bit. If anybody finds an error in my explanations, please let me know. As I am replying quite quickly to these questions.

Thanks.