amirnetz said:
NJ5 said:
jkimball said:
You are probably right about the price cut. But there is no way they have 12 months to think about this. No way. Decisions need to be made...now.
Let me put it this way: you don't want a price cut because it will cost $1B. but you are willing to wait around a year, which by your own math, also will cost a $1b?
if the world economy hadn't just collapsed, then they might have a year. But it did. So they don't have a year. They have to take a 1B risk by cutting the price, or get the heck out. And it will happen in early spring.
personally I'll wait for the firesale :)
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If my assessment of Sony's holiday quarter is correct, by the time spring comes Sony will already have announced significant measures to reduce costs. That would for sure include significant job cuts, and perhaps exiting some markets which allows them to sell off assets. I don't think job cuts alone would be enough as a response to a 1-3 billion dollar loss, but it's not easy to predict what products they could get rid of.
I'm thinking that one of the easiest things to do could be selling off their 50% stake in Sony Ericsson. That wouldn't affect their business much. Another good idea would be to downsize or eliminate their music publishing business, CDs are dying anyway. Blu-Ray should stay for sure, after all it's their first winning format and it probably doesn't incur big costs at this point.
If the PS3 is one of the unlucky products (I don't think it's very likely, not in the next few months at least), I'm guessing you'd get your firesale before spring. If they don't get rid of the PS3, you won't get any price cut or firesale though, they'll have to be very careful about wasted money.
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I am completey with you NJ5.
Sony is going to be awashed with red ink in the coming quarters and drastic measures must be taken. Selling assets in this climate is not going to work too well - capital sources are drying out and there is hardly anyone who has enough cash or credit to buy anything - let alone a losing business. Look at the rock bottom valuations today in the market to understand that there are no buyers in this market.
The only option is to cut. Cut deep. Cut whatever is losing them money. The PS3 is the biggest money loser Sony has. The gaming division is losing over $1B/year. Since the PS2 and PSP are profitable, it means that the loses of the PS3 are 1B+these other product profits. Huge.
Unless the PS3 can balance itself out, it might be game over for console much sooner than anyone can expect.
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What would Sony do then? Start advertising PS2 again, start their devs up on PS2 and PSP games? Where do they go from there?
