Did Sony Profit from the Walmart $100 Discount?

[bumidan]

To All: I know numbers are dry and boring, but I'm not sure if anybody read the thread about numbers.

It seems like only Bodhesatva has at least read and understood the numbers.

As mentioned originally - IF Walmarts margins are 6% for their goods. Let's even assume it's 10% to be generous. Then the cost of the Gift Card is $90 to them IF FULLY REDEEMED. NOTE: The 6% operating margins are from Walmarts publicly released financial statements, please check them out.

Therefore, as a BUSINESS, Walmart is losing $90 less the margin on the PS3 in this example. Assume Walmart makes $50 per PS3 - which according to Bod would be INSANE.

For the PRESENT transaction, Walmart loses $40 on the PS3.
For the FUTURE transactions, which some of you has pointed out that Walmart will make money on - Walmart has to sell the equivalent OF $400 worth of OTHER items just to BREAK EVEN on this specific promotion.

Unless the Gift Card is RESTRICTED to just electronics/games purchases - it is NOT REASONABLE to assume that the Gift Card will be used to buy those items with the HIGHER MARGINS (like software and games).

That is why for me and Bodhesatva, it makes the MOST SENSE that the manufacturer (in this case SONY) is shouldering some of the load - EITHER through additional DISCOUNTS for future orders, greater MARKETING ALLOWANCE or any other financial incentive that will make this PROMOTION SPECIFIC TO BLU RAY - financially worthwhile for them.

If you were the MANAGER of this division of Walmart - you have to present a valid financial reason (projections, assumptions, etc) in order for this PROMOTION to be even approved by your higher ups.

Note: On the EA financial statements (if anybody reads those), they claimed that in 2007 (page 5), they said that sold 13% of their packaged revenue was to Walmart compared to 12% to Gamestop.