Just How Big Are Sonys Pockets?

[Bodhesatva]

SamuelRSmith said:

According to Jack Tretton, the PS2 has made $26 billion in the US alone, lets say it makes about the same amount in Europe and Japan total, and that equals $52 billion made from the PS2.

And yet the Playstation subsidary only accounts for 13% of the company as a whole (or so I read from somewhere on this forum).

Sony stocks are worth over double that of Microsofts stocks.

So, I ask the mathematicians of this forum, how much is Sony worth? And would Sony pour more money into the PS3 than Microsoft the 360. Would the 360 be lower piority for Microsoft atm, with low Vista demands, a strong Apple competitor (since the iPod, Mac OS has become more popular than ever), and a failing Zune. Especially seeing as the Xbox division has never been in profit, Microsoft want to have something to show for it soon.

(Note: if you have trouble navigating the Forbes website, just do a search/find for "Sony" or "Microsoft" or whichever company I'm referencing on the given page).

You've got this all twisted. First, yes, that 26 billion is revenue. As can be seen here:

http://www.forbes.com/lists/results.jhtml?passListId=18&passYear=2005&passListType=Company&searchParameter1=unset&searchParameter2=unset&resultsHowMany=100&resultsSortProperties=%2Bnumberfield1%2C%2Bstringfield2&resultsSortCategoryName=rank&fromColumnClick=true&bktDisplayField=&bktDisplayFieldLength=&category1=category&category2=category&passKeyword=&resultsStart=101

Sony's total net profit for the entire fiscal 2005 was .8 billion dollars. That's all their divisions, not just gaming, all over the world. Their profits last year were approximately 1.5 billion dollars -- largely thanks to the Bravia Television, apparently, and not to Playstation. Here is a listing about the Bravia:

http://bloomberg.com/apps/news?pid=20601087&sid=aAQ16Hzzwzuc&refer=home

And now one about overall profits.

http://www.forbes.com/lists/2006/18/Profits_3.html

By contrast, Microsoft's profits last year were 13 billion, or approximately 9 times that of Sony.

http://www.forbes.com/lists/2006/18/Profits_1.html?boxes=custom

Also on this list, you can see why your "Sony stocks are worth more than Microsoft stocks" is not a valid calculation. The reasoning is simple: different companies have different amounts of stock. For example, imagine I am the sole owner of small but succesfull private business that is worth 1 million dollars. In effect, this means I own the single "stock," and that individual stock is worth one million dollars. Does this mean I'm worth more than Sony? Of course not. Sony's stock is currently worth approximately 52.5 dollars (give or take the last week's change), which is 1/20000 the value of my company's single stock... but there are millions if not billions of Sony stocks, instead of just 1, so you have to multiply. It's not just the value of a single stock, it's the number of them. In fact, when prices get very high, stocks split -- so, for example, the next time Microsoft stock reaches 200 dollars per share, the stock will split: there will immediately be twice as many shares in existance (With each owner having twice as many as before), but each individual stock will be worth 100 dollars.

So the way to calculate value is (Number of Stock) x (Value of Stock) = Market Value. This is listed on the Forbes site as well. Microsoft's Market Value is 279.02 Billion:

http://www.forbes.com/lists/2006/18/Profits_1.html?boxes=custom

While Sony's is 47.75 billion:

http://www.forbes.com/lists/2006/18/Profits_3.html

Meaning that Microsoft is approximately 7 times bigger than Sony in overall value. Last year, Sony made about twice as much profit as Nintendo, and their market cap was approximately twice that of Nintendo, but now Nintendo's market cap is higher than Sony's (making Sony the least valuable company of the three), and Nintendo profits are surging, and could very well end up being higher this year than all of Sony's net profits. Either way, Sony is much closer to Nintendo than it is to Microsoft.

Also relevant are cash reserves -- how much money each company has in reservation for expenditure or hard times. Microsoft is an absolute beast in this regard; they have 49-50 billion in cash reserves.

http://seattlepi.nwsource.com/business/131322_msftearn18.html

Nintendo has reserves of approximately 7 billion (listed in the middle of the page, just do a search for the word "reserve"):

http://www.dfcint.com/game_article/feb03article.html

And Sony has the smallest reserves of the 3, at approximately 5 billion. Here's a complete listing of some major companies to give you an idea how reserves stand, and as you can see, Microsoft dwarfs everyone (not just the video game business, everyone):

http://blogs.business2.com/apple/2007/06/apples_cash_res.html

Hope that helps!