Sony cant cut the price

[NJ5]

Millennium said:

swearitsoul said:
Point is they can take it, they are a big company with lots of cash. Lowering the price is a definte option in 2009.

Big company? Yes. Lots of cash? Not remotely. Take a look at their own financial reports sometime: they're actually in serious trouble. A couple of weeks ago they very nearly found themselves on the wrong end of billions of dollars in debt -more, in fact, then their current cash reserves- coming due right then. They were able to avert that, but not by paying the debt: it's still there, and it will come back to bite them again, especially given the current economic conditions.

Many Sony fans have honestly been wondering why Sony hasn't cut the price. One thing to remember is that Sony has a business. It has one purpose, and one purpose alone: to make money. All other concerns are secondary, and the only other question is whether or not it is better to make money in the short term or the long term, and that question has different answers at different times. Right now, Sony needs more money in the short term. If the PS3 can make more money (or, more to the point, lose less of it) in the short term at its current price and sales than it would make with more sales but a lower price, then Sony will follow the path that meets its current needs, and that means no price cuts.

In the long term, this strategy makes no sense at all. It cannibalizes the possible long-term gains that you mention and cling to. I understand that, and undoubtedly Sony does too. But right now, Sony doesn't have the luxury of thinking in the long term: it has short-term needs that absolutely must be satisfied if the company is to keep operating, and that requires a different way of thinking about things. If you still choose not to believe me, that's fine, but I challenge you to come up with another way to explain what Sony is doing right now.

Actually I think the debt which expired a few weeks ago was not bigger than their cash reserves. That is if you're talking about this report:

http://www.bloomberg.com/apps/news?pid=20601101&sid=aEXJ1SkWAj.8&refer=japan

What this may mean is that the $7 billion in cash I mentioned before may now be less than $5 billion... It will be interesting to see their next financial report