pretty much, depends also I guess on how many people they have employed as well.  I don't believe they released any games this past quarter so they aren't getting a return on anybodies work so their losses would be pretty much ps3 hardware and a few thousand peoples salaries.

I am not too convinced PS3 software is very profitable yet. I am including PSN in that mix.

By profitable, I mean specifically - financial statement profitability.

Especially if they are incurring huge development costs for newer/upcoming games. Because you account for expenses as they occur, while recognizing revenue when they occur.

In the games industry, there tends to be that 12 to 24 month lag.

So if Sony studios are trying to develop many EXCLUSIVE games, then those expenses will be up.

On the other hand, if they shutter or discontinue developing some games - then that would also reflect badly on their profit/loss statements.

As well, the PSN may also be sucking money from the games division, while not bringing in enough revenue to offset its costs.

Maybe mid July for the earnings report is optimistic. Hopefully sometime before the end of August.

I suspect that the current management of SCEI exaggerated losses for FY07 to make themselves look better. Such losses would have been the fault of the previous management, and any surprise on the upside will be a consequence of their superior helmsmanship. This is pretty much standard practice.

So the question becomes, were they able to massage the numbers enough. How much do they actually need to surprise on the upside for this quarter? They might even be able pin any losses on the deteriorating global economy ala sony-erikson, but I doubt it.

that's somewhat unlikely.

Though if Sony reports a profit of $100 million or more this quarter, your conspiracy theory may be a little bit more plausible.

There's no conspiracy theory here. This is a well documented consequence of the "priciple-agent" problem fairly solidly backed up -- by the standard of economics, an admitedly poor standard -- by empircal evidence. This is one of the arguments some economists make against quarterly and even yearly reports. Most people, I think, do not realize how much flexibility there is in accounting. Small changes in how you depreciate various assets and value various illiquid, exotic forms of "capital" can wildly affect your margins, just ask Bear Sterns. There is in fact no definitive right way to do it that everyone agrees on.

-- Im guessing thisquarter will see a small loss or small profit due to SONY shipping fewer PS3's and more PS2's than last quarter. As a result of them doing the opposite last quarter in a bid to start this fiscal year on a good note. 2nd Q they will proberly take a loss with profit in 3rd and 4th Q...

@ alephnull
I don't dispute that you can massage your numbers. That happens all the time.

However, for a "simpler" business model such as selling consoles and games, there is not as much room to fudge numbers compared to a more "complicated" business such as Bear Stearns (eg. valuing securities which don't have a consensus market price).

You can only manipulate numbers so much to a point that more manipulation becomes illegal, especially for public companies. Or even if it is not illegal, but unethical, then your numbers come into question. And lack of credibility will negatively affect your stock price.

No need to reply. Just posting so it will be on top my forum posts lists still.

But feel free to READ and post.

This prediction is based on PS3 hardware losing $150 per console for the Quarter Apr to June 2008.