Kyros said: Sony reports in yen, what do you not understand about that? Sony doesn't expect to make any money on a sold PS3. They make money on games, accessories etc. So money spend by Sony to build a PS3 = yuan, dollar, taiwandollar Money received by Sony for selling a PS3 = dollar, euro. The yen doesn't come into that anywhere. This would be different if they would make money with the sold PS3s, then their profit on each unit sold would be in yen and would become lower. I don't understand what you do not understand about that.

Have you actually looked at what Sony said and the chart which FishyJoe posted (also from Sony)?

 

NJ5 said: DMeisterJ said: Sony is doing horrible discussion no. 2088463. I mean, seriously. How many times can we talk about how the strong dollar is hurting Sony? 1 more time than people say "domination delayed until price cut"

I'll concede that.

But I don't ever remember seeing the same exact thread numerous times in just a number of days. 

FishyJoe said: NJ5 said: woopah said: this will also cut into nintendo's profits as well, luckily its got the resoruces to not be as badly affected intendo has a ton of advantages over Sony to weather this storm: 1- Higher profit margins (20-30% as opposed to 1-4% in Sony's case) 2- Their products are more recession-proof 3- No debt (as opposed to $10 billion in debt in Sony's case) 4- They make money on everything, not just software 5- None of their products is declining (in Sony's case the PSP and PS2 are) 6- From what I read, they have a higher proportion of expenses in foreign currencies (not sure about this one)     Another huge factor is Nintendo's expenses are minimal. They have 3700 employees compared to Sony's 180,000 employees. They don't have big offices and facilities around the world. All those things are huge ongoing expenses that can't be shed easily.

 

When did Sony get so fat and bloated.....?

You mean the statement where they said that their business is hurt by the exchange rate? Which is undoubtedly true. They get less revenue in yen. Which will hurt all their businesses that buy, produce or develop in Japan. If you can show me where I said anything to the contrary ...

But to come back (again) to the point of the first poster, which stated that the appreciation of the yen is in effect a 40% price cut on the PS3...

This is bullshit because the costs for building a PS3 are not (or only to a small part) incurred in Japan.

So does the yen hurt Sony? Yes.
Does the yen hurt the gaming division of Sony (all japanese software and hardware devs, business people etc.) ? Of course.
Is an appreciation of the yen financially the same for sony as a price cut i.e. does it incur the same costs?)

NOOOOOOOO. Wow that wasn't so hard was it?

NJ5 said: Bboid said: NJ5 said: Bboid said: Sony is raising the price of consumer products in EU post xmas 08.  The Game divisionproducts are excluded from this.  This is to offset yen issues and to possibly open up their market in other divisions.  Full details have yet to be finalized/officially released. That will go over well. I'm sure Samsung will appreciate it. Not that Sony has much choice. They're between a rock and a hard place.     I would venture so say Samsung would also possibly raise prices.  They are a joint venture(with sony) in LCD flat panel TV's (research and panel production) so they may have a obligation to raise as well (benefits reaped soed back into joint venture research and offset one sides lack of contribution), but honestly i'm not entirely sure how that partnership is worked out.  I know it is strongly believed panasonic and toshiba both will also be raising prices in the EU post Xmas 08.  Frankly, it sucks if you plan on buying foreign electronics in the EU next year. That's possible (though I wouldn't bet on it). From the currency perspective, Samsung is very well positioned to drop the hammer on Sony, as the Won has been weakening against the dollar and euro.

If you think about it in a strategic manner, having the venture split between 2 asian electronics powerhouses (japan and korea) it provides a nice outlet to avoid potential currency fluctuations in a single market.  It is likely (even if samsung raises their prices as well) that they would only see a rapid rise in profits.  This is good news because it means R&D and production of the panels for both Sony and Samsung will continue (leading to the chance for production costs to drop).  There is even a good out for Sony, should they decide to cut their own throat and sell off their share in the venture (if this happens I will stop watching TV's for the rest of my life *empty promise*).  The partnership will continue to grow, albeit slower than expected, and continue to gain value.  So I think Sony's LCD division is still in a good place even considering currency issues and falling demand as noted in their forecast adjustments.

 

BTW, still trying to find clear details on partnership.  Might not be readily avalable to just anyone though.  Based on their long standing relationship, which only seems to be strengthening, Samsung may go out on a limb and meet halfway(price increase as well but less than sony's).  Aside from LG and Samsung, the HDTV market seems to be heading into rough seas.

 

@Kyros: That's what I told you in the other reply. But before you were only looking at expenses, not the revenue part.

 

@NJ5: You are speaking in riddles my friend. Which cherry picking? And sorry but I do not care enough to follow "hints".

I said that the part that was bolded in the original post is simply wrong. And this is the case. So I do not get what you want from me.

@Kyros: Forget that, I edited it out. Sorry. The point is that the price cut/strong yen equivalency is correct in terms of revenue. In terms of revenue+expenses, it's still correct (though to a lower extent as the expenses partly mitigate the problem).

 

Bboid said: If you think about it in a strategic manner, having the venture split between 2 asian electronics powerhouses (japan and korea) it provides a nice outlet to avoid potential currency fluctuations in a single market.  It is likely (even if samsung raises their prices as well) that they would only see a rapid rise in profits.  This is good news because it means R&D and production of the panels for both Sony and Samsung will continue (leading to the chance for production costs to drop).  There is even a good out for Sony, should they decide to cut their own throat and sell off their share in the venture (if this happens I will stop watching TV's for the rest of my life *empty promise*).  The partnership will continue to grow, albeit slower than expected, and continue to gain value.  So I think Sony's LCD division is still in a good place even considering currency issues and falling demand as noted in their forecast adjustments.   BTW, still trying to find clear details on partnership.  Might not be readily avalable to just anyone though.  Based on their long standing relationship, which only seems to be strengthening, Samsung may go out on a limb and meet halfway(price increase as well but less than sony's).  Aside from LG and Samsung, the HDTV market seems to be heading into rough seas.

It does make sense regarding the TV market, and it could be that way. However, it's quite likely the information wouldn't be public if it's the case. We'll just have to wait and see, it will be interesting.

 

FishyJoe said: twingo said: Japanese gov will fix that soon enough kids, you all don't know how things work do yahh.   You haven't been following the Japanese market for the last two decades, have you

You either have insanely bad timing or insanely good timing I can't tell. The Japanese government just announced a rather large stimulus package while the BofJ just announced that it is going to start directly purchasing corporate paper and hinted that "vigorous quantitative easing" was on the table after friday's carnage thanks to the failure of the US to bailout it's auto industry. Given that the bruising the nikkei has been taking a month back was being referred to as "Sony-shock" I think they might be a candidate for support.

The yen suddenly has been getting hit thanks to large numbers of over leveraged institutions, who have been engaging in the carry trade and now suddenly and simultaneously have to meet their margin calls. This of course happened at the same the BofJ was trying to unwind their dangerously large holdings of sovereign debt amplifying the problem.

However if you and NJ5 really think the Yen has more to go then I would suggest you guys open a forex account and place a wager. The economist intelligence unit is still basically predicting the BofJ will intervene to smooth out the yen's strengthening over the next few years predicting an average rate of ¥99 to $1 and ¥134.6 to €1 for 2009. But hey, you guys are the experts, no doubt you will be the next Soros :P