Its hard to say without seeing the fiscal statement.

Its either the scenario I described or its a wiping of previous deferred tax assets due to making losses in previous years. But the second scenario would involve a cash write-down - which we can't see until the statement releases.

If its the former, they are trying to be responsible and trying to prepare for a few hits in the next couple of years. If its the latter, they are merely writing off this asset from the previous years losses. It represents a special one-off cost that the market won't care too much about.

Either way its not the end of the world scenario.

Official revision...

http://www.sony.net/SonyInfo/IR/financial/fr/10revision_sony.pdf

Japan is finished.

I also don't think this particular loss warning is that big a deal. It's basically an accounting detail.

Much bigger problems for Sony are:

- the earthquake

- the PSN hack loss

- the yen which doesn't stop going up (not good for an exporter like Sony)

- the still crappy situation of the world's economy which is likely to continue

- the fact that Sony is getting its lunch eaten by Samsung, Apple, Nintendo, Microsoft etc. etc.

You mean they think it's better to pay future taxes now? Why would that be? I mean 100 billion yen profit would have sounded much better to the average person.

wasnt most of that paying of the next 3 years of taxes early?

They are required to do so under GAAP accounting requirements in the US. It only occurs now because they predict a few years of profit and had a few losses previously.

EDIT from here it seems it is a writeoff of previous years DTA's.

• "Companies are allowed to carry forward tax losses [in japan] for up to seven years if they can show future taxable profits are likely. But three consecutive years of net losses is considered evidence under U.S. accounting rules, the global standard, that those credits may not be available to it.

This makes it a non-cash loss and therefore reported as such. If Sony can reach a profit next year, then these credits will be reapplied.

This will definitely hurt them even if they are a huge business.

but... I still get my free games right?

Dude, get a grip. All these years, Japanese companies have generally been making profits, whereas Western companies continue to bleed cash.