The present and future of Sony

[NJ5]

Sky Render said:
Is it even possible to have a profit margin that low in economically strong years? That is not a sign of a well-run company. Smartly run businesses keep their profit margins as high as possible, only lowering them when a potential risk-to-rewards evaluation on a new product turns up an adequately low-to-high ratio that they can realistically invest in it and expect it to up profits. The only time you ever break from that strategy is when you want to introduce a phenomenally high-risk-high-reward item, in which case you need to look into a comprehensive risk-reduction strategy like Blue Ocean to ensure your product has a good chance of success.

From the looks of it, Sony is maintaining a lot of deadweight products that are driving their profits down. Either that, or their cost-to-price ratio is absurdly close to 1, in which case they really should consider either raising prices or (if the market won't take higher prices) scaling back the level of technology being put into their products. Whatever the case may be, Sony definitely needs the help of a few good economists, business strategists, and at least a few professional accountants too. Having that kind of horrible profit margin even in a time of economic strength is a very bad sign.

To be fair, Sony has much more competition than Microsoft, and also than Nintendo (nowadays he he). There's a lot of competition in the electronics business (their main one), so it's not all their fault (although I'm sure they have a share of the blame, for example on the PS3).

I should check out the profit margins of other electronics companies some time.

celine said:

Bodhesatva said:

NJ5, I think your concluding thoughts are at least slightly alarmist, but overall I'm amazed at how well researched this is. Excellent job.

As a last note, I'd recommend finding some links about debt/interest. Sony has significant debts, while Nintendo and Microsoft, in comparison, have none.

Total debt as 9-30-08 is 1,098,942.00 million yen ( lousely converted is around $10 billion )

http://finance.google.com/finance?fstype=bi&q=NYSE:SNE

 

Interesting, as if they didn't have enough problems... It seems Sony is like the guy who thinks things will keep on being good enough that they can maintain a huge debt. You know, the kind of people who tend to lose their homes and join homeless shelters and soup kitchens.

Many companies have a lot of debt, but those are precisely the companies which have the most risk from a downturn.