You think they're breaking even with the previous exchange rates or the current ones?

I'm being optimistic and say that even with the current exchange rates, they would break even or make some profit - because it is a holiday quarter.

Maybe they reduce costs on the PS3 even further...

Oh, I was referring to PS3 hardware only in my question. They were expecting to break even towards the end of the fiscal year, but when they said that the exchange rate problem hadn't started yet. Unless things are going much better than planned, they can't be breaking even on Europe/USA PS3 hardware right now.

The only thing which is improving for the gaming division is PS3 software sales. It seems they have increased around 80%. Then we have decreasing PS2 and PSP hardware and software sales, the two SCE cash cows.

I didn't do any calculations, but superficially it looks like the increase in PS3 SW may get almost all eliminated by the PS2/PSP decreases. Then the exchange rate problem shows up and decreases revenue by 15-20% across the board, which is the biggest issue in this quarter IMO.

The real unknown is whether there were big cost decreases in PS2 and PSP... That's the one thing which could get them close to profitability in my view.

Aren't you guys exagerating it a bit ? They are still building up their user base and still in early half of console lifetime so while they might take the beating this year the perspective for 2009 is much better.

And how do you get 2$ per ps3 software profit ? This seems extremly low for current gen machine.

@Zlejedi: My analyses are only for the current quarter, not for 2009.

Regarding bumidan's numbers, I can't really speak for them since I'd have to read all the previous threads. I believe he has been trying to fine tune his parameters, but I'm not sure about the validity of his method.

A more telling story to me is if they can post an annual profit ( operating income ) in the current fiscal year because the long term expectation ( I remember Sony's CFO quote from 2006 ) was to start to be in the black with the fiscal year ending march 2009 ( I'm talking about SCE ). 

We can start to see if the plan has change its course or not.

I believe they already downplayed those expectations in the latest financial report due to the currency exchange problem. That, by the way, was before the dollar/euro really weakened and the recession fully hit.

I just found the quote I mentioned (see the bolded parts if you don't want to read all of it).

By the way, there's a very interesting piece of info there, when we mentions the benefit of hedging as being one third of revenue. That means my estimates aren't too far from reality.

I think your estimation of software profits are way too low.

For example a revenue of $330 million will easily translate in a profit of $200 million for Halo 3. Assuming the development costs plus marketing costs are around $100 million is already an overestimation imo. 

However, Sony doesn't have first party hits like Halo 3. We can assume that some have been profitable, but indeed don't make a real impact on SCE's financial situation. Most 1st party software has been bundled anyway. In my estimation on the software that has been released there's no cumulative gain.

I think PS2 and PSP hardware make at least $10 profit, PS2 probably much more. Retail price is $120 for an 8 year old console. I wouldn't be surprised if it made $75 per console.

The main lossmaker is PS3 hardware and the enormous overhead of gamestudio's. Sony has more gamestudio's than Nintendo, and I've estimated before that Sony's software doesn't earn money. At this moment there are several enormous projects underway with huge teams that all need to be paid. Gran Turismo 5, Killzone 2, God of War 3 etc. We can easily assume that the best (and therefore most expensive) teams are working on these titles.

If you try to incorporate that in your estimations it could be even better, although I'm impressed with what you've done so far.

Sony still generated a profit, HDTV sales and profits were up, some HDTV sales may be attributed to the PS3 which is an excellent HD gaming console as well as an excellent Blu-Ray player.

I think Sony will be able to weather through the current economic crisis without really major problems this year.

wow, someone hasn't been paying attention. Sony itself has already announced to have major problems, especially with the current Yen rate. There's a big chance that Sony as a whole will be in the red this Q and FY. SCE doesn't even stand a chance of being profitable over the whole year.

Besides: most HDTV's are being sold because they're flat and because the neighbours have one. Mainstream consumers don't have a clue what HD. Saying the PS3 contributes to HDTV sales is the world upside down.