dallas said:
Bodhesatva said:
dallas said:
Btw, the Sony corporation tripled its operating profits from a year earlier.....so since the company is pretty healthy expect some good things from them, like upgrades to Home, good games announced, price cuts etc.
MS corporate on the other hand increased its operating profits but didnt even come close to doubling with respect to the same time period. |
Sony doubled their profits, not tripled (pretty sure that's what you meant, looking at your second paragraph). It's interesting that you believe -- and I don't think this is a completely unfounded position -- that profits in other areas means more money spent on the PS3. In effect, you're asking for the rest of Sony's rather massive assets to act as a money-producing device for the Playstation 3. Clearly, Sony is willing to lose some money here in the hope/belief that they will make that money back later on; I just don't think it's a bottomless pit, as you seem to be characterizing it. Share holders would not be happy if Sony treated their company this way! Let me paint this in a comical but realistic way, so that you can see what you're asking Sony to do here: "Hey, we made more money in many of our divisions. Rather than use this money to develop more camera technology, or to produce more movies, or more TVs, or our sound systems, or to increase our marketing in any of those fields, or choosing to save some of it to increase our comparatively small cash reserves, or even paying some of these profits back to our shareholders in dividends, let's spend it all on PS3 development, our least profitable sector over the last two years!" Is it possible they will choose to spend some of their profits on the PS3? Yes, absolutely. I think Sony is correct in believing that there is a lot of money to be made in gaming. However, they also can't treat all their other divisions as a simple Playstation 3 - money - providing device. Not only would that ultimately hurt their other businesses, but it would mean that Sony would not meet their financial expectations for the year, which is a very bad thing to do. |
No one is trying to say that sony's budgeting is a bottomless pit. I am just saying that to the extent that Sony has brought in more money this year, they will be able to throw more onto the various parts of the company, including its gaming areas. Secondly, I think that you missed the point that Sony's gaming division's negative profits are on a sharp decline. This trend leads me to beleive that it will be making money, not losing it soon. |
I did not miss this, you simpy did not consider how profoundly important the cyclical nature of the business is.
Here's a simple example: if Sony loses 500 million this September-December, would you say that they lost less money than they did in January-March? You could say that, but it totally misses the point. Obviously they will lose less -- you're comparing Christmas time to the economic wasteland that is the post-Christmas shopping period! Similarly, if you look at every year for all of these companies, the April-June quarter is consistently more profitable than the Jan-March quarter (Microsoft easily would have lost less money if they didn't eat that 1.1 billion dollar warranty). Comparing the two isn't fair.
These things are compared by looking at any given quarter last year, and the year before that. Sony has lost more money in Q4 FY 2006 and Q1 FY 2007 than they did in Q4 FY 2005 and Q1 FY 2006. They are losing more money on a seasonal basis than they were last year.
