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Bboid on 15 December 2008
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amirnetz said:
Bboid said:

All indications are, based on data provided, the gaming division to return to profitability between Q3 FY08 and sometime in FY09.  Positive sales growth in the division and continued drastic decline in operating loss attributed to PS3 and PSP sales and decreased PS3 production costs.  Though the division is still small within the company it is experiencing the largest growth in the company.  Falling software sales attributed to fall in PS2. 

 

 

This is the key. The indications of profitability. If the financial reports will not show such indications (i.e. breakeven point is not reached now or looking to be there within a quarter) then some restructuring will be required in the gaming division.

Further, if the losses are increased instead of shrinking then it would be a whole new ballgame. Nothing will be immuned.

"Sometimes in FY09" is not narrow enough. The gaming division does not have 6 quarters to get straight. I think they have till the end of the fiscal year. Two more reports. That's it. I wrote above that the next set of reports are pivotal. I hope you can see why now.

 

 

Pre currency appreciation it was pretty clear profitability would be reached Q3-Q4 FY08.  Only reason it may be pushed to FY09 is if the currency situation continues to decline.  But if the positive growth continues (and looks like it will continue into the next FY) in the next reports like you say, there is little reason to cut the PS3 or gaming division harshly or completely out.  Restructuring is inevitable for it though and is a good way to strengthen and reinforce it.  2009 may see the ps2 finally go to its grave though (which may push late adopters into buying a ps3 or help the competition even more).  I personally think the ps2 is going to be cut, especially if the PS3 can magically turn around and gain in december and finish the holidays up (even if its up 0.1%).

 

But yeah, it basically revolves around if losses increase due to the yen/fall in demand/global recession or if the company has successfully hedged against a further market meltdown.